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Federal Register / Vol. 81, No. 251 / Friday, December 30, 2016 / Notices
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[FR Doc. 2016–31735 Filed 12–29–16; 8:45 am]
BILLING CODE 4332–90–P
DEPARTMENT OF JUSTICE
Antitrust Division
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United States v. AMC Entertainment
Holdings, Inc., et al.; Proposed Final
Judgment and Competitive Impact
Statement
Notice is hereby given pursuant to the
Antitrust Procedures and Penalties Act,
15 U.S.C. 16(b)–(h), that a proposed
Final Judgment, Hold Separate
Stipulation and Order, and Competitive
Impact Statement have been filed with
the United States District Court for the
District of Columbia in United States of
America v. AMC Entertainment
Holdings, Inc., et al., Civil Action No.
1:16–cv–2475. On December 20, 2016,
the United States filed a Complaint
alleging that the proposed acquisition
by AMC Entertainment Holdings, Inc. of
Carmike Cinemas, Inc. would violate
Section 7 of the Clayton Act, 15 U.S.C.
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18. The proposed Final Judgment, filed
at the same time as the Complaint,
requires AMC to divest certain theatre
assets, reduce its equity holdings and
relinquish its governance rights in
National CineMedia, LLC, and complete
screen transfers to the cinema
advertising network of Screenvision,
LLC.
Copies of the Complaint, proposed
Final Judgment, Hold Separate
Stipulation and Order, and Competitive
Impact Statement are available for
inspection on the Antitrust Division’s
website at http://www.justice.gov/atr
and at the Office of the Clerk of the
United States District Court for the
District of Columbia. Copies of these
materials may be obtained from the
Antitrust Division upon request and
payment of the copying fee set by
Department of Justice regulations.
Public comment is invited within 60
days of the date of this notice. Such
comments, including the name of the
submitter, and responses thereto, will be
posted on the Antitrust Division’s
website, filed with the Court, and, under
certain circumstances, published in the
Federal Register.Comments should be
directed to Owen M. Kendler, Acting
Chief, Litigation III Section, Antitrust
Division, Department of Justice, 450
Fifth Street N.W., Suite 4000,
Washington, DC 20530 (telephone: 202–
305–8376).
Patricia A. Brink,
Director of Civil Enforcement.
United States District Court for the
District of Columbia
United States of America, Antitrust
Division, 450 Fifth Street NW., Suite
4000, Washington, DC 20530, Plaintiff,
v. AMC Entertainment Holdings, Inc.,
One AMC Way, 11500 Ash Street,
Leawood, KS 64105, and, Carmike
Cinemas, Inc., 1301 First Avenue,
Columbus, GA 31901, Defendants.
Case No.: 1:16–cv–02475.
Judge: Randolph D. Moss.
Filed: 12/20/2016.
Complaint
The United States of America, acting
under the direction of the Attorney
General of the United States, brings this
civil antitrust action to prevent the
proposed acquisition by Defendant
AMC Entertainment Holdings, Inc.
(‘‘AMC’’) of all of the outstanding voting
securities of Defendant Carmike
Cinemas, Inc. (‘‘Carmike’’).
I. Nature of Action
1. AMC is a significant competitor to
Carmike in the exhibition of first-run
commercial movies in multiple areas
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around the United States, including the
areas in and around Montgomery,
Alabama; Destin and Miramar Beach,
Florida; Orange Park and Fleming
Island, Florida; Cumming, Georgia;
Lithonia and Conyers, Georgia;
Crestwood and Lansing, Illinois; Normal
and Bloomington, Illinois; Pekin, Peoria,
and Washington, Illinois; Inver Grove
Heights and Oakdale, Minnesota; Coon
Rapids and Mounds View, Minnesota;
Rockaway and Sparta, New Jersey;
Westfield and Cranford, New Jersey;
Lawton, Oklahoma; Allentown and
Center Valley, Pennsylvania; and
Madison and Fitchburg, Wisconsin
(collectively, the ‘‘Local Markets’’). If
AMC acquires Carmike, AMC would
obtain direct control of one of its most
significant competitors in the Local
Markets, likely resulting in higher ticket
prices and/or a lower quality viewing
experience for moviegoers in these
areas.
2. AMC is also a founding member of
National CineMedia, LLC (‘‘NCM’’)—the
nation’s largest provider of preshow
services to exhibitors—and remains one
of NCM’s largest investors and
exhibitors. Carmike is the largest
exhibitor in the network of NCM’s main
competitor, Screenvision Exhibitions,
Inc. (‘‘Screenvision’’), and is one of
Screenvision’s largest investors. NCM
and Screenvision are the country’s two
leading preshow cinema advertising
networks and together cover over 80%
of movie theatre screens in the United
States. If AMC’s proposed acquisition of
Carmike were to proceed, it would
likely weaken competition between
NCM and Screenvision because they
would have a significant common
owner. In addition, the proposed merger
would undermine Screenvision’s ability
to compete for advertisers and
exhibitors because, as explained below,
Screenvision will no longer be able to
rely on Carmike’s growth to expand its
network. The loss of competition in the
markets for preshow services and
cinema advertising will likely result in
lower preshow services revenues to
exhibitors, higher prices to cinema
advertisers, and lower quality preshow
services and advertising.
3. Accordingly, AMC’s proposed
acquisition of Carmike likely would
substantially lessen competition in each
of the Local Markets for the exhibition
of first-run, commercial movies and in
the markets for the sale of preshow
services to exhibitors and the sale of
cinema advertising to advertisers in the
United States in violation of Section 7
of the Clayton Act, 15 U.S.C. 18, and
should be enjoined.
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II. Jurisdiction and Venue
4. This action is filed by the United
States pursuant to Section 15 of the
Clayton Act, as amended, 15 U.S.C. 25,
to obtain equitable relief and to prevent
a violation of Section 7 of the Clayton
Act, as amended, 15 U.S.C. 18.
5. The distribution and theatrical
exhibition of first-run, commercial
films, the provision of preshow services
to thousands of theatres across the
United States, and the sale of cinema
advertising to advertisers throughout the
United States are commercial activities
that substantially affect, and are in the
flow of, interstate trade and commerce.
Defendants’ activities in purchasing
preshow advertising and other content,
equipment, services, and supplies, as
well as licensing films for exhibition,
substantially affect interstate commerce.
6. The Court has jurisdiction over the
subject matter of this action pursuant to
15 U.S.C. 25 and 28 U.S.C. 1331,
1337(a), and 1345.
7. Defendants consent to personal
jurisdiction and venue in this district,
and AMC operates theatres in this
district. This Court has personal
jurisdiction over each Defendant, and
venue is proper under 15 U.S.C. 22, and
28 U.S.C. 1391(b) and (c).
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III. Defendants and the Proposed
Acquisition
8. Defendant AMC is a Delaware
corporation with its headquarters in
Leawood, Kansas. As of September 30,
2016, AMC operated approximately 388
theatres with a total of 5,295 screens
located across 31 states and the District
of Columbia. AMC reported
approximately $1.89 billion in U.S. box
office revenues in 2015 and
approximately $1.46 billion in U.S. box
office revenues for the first nine months
of 2016. Measured by number of
theatres, screens, and box office
revenue, AMC is the second-largest
theatre circuit in the United States.
9. Defendant Carmike is a Delaware
corporation with its headquarters in
Columbus, Georgia. As of September 30,
2016, Carmike operated approximately
271 movie theatres with a total of 2,917
screens located across 41 states.
Carmike reported approximately $490.0
million in U.S. box office revenues in
2015, and approximately $370.8 million
in U.S. box office revenue for the first
nine months of 2016. Measured by
number of theatres, screens, and box
office revenue, Carmike is the fourthlargest theatre circuit in the United
States.
10. On March 3, 2016, AMC and
Carmike executed an Agreement and
Plan of Merger, under which AMC
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would acquire all outstanding voting
securities of Carmike for approximately
$1.2 billion. If the parties consummate
the merger, AMC will be the nation’s
largest theatre exhibitor.
IV. Background
A. Movie Theatres
11. Viewing movies in a theatre is a
popular pastime. Over 1.3 billion movie
tickets were sold in the United States
and Canada in 2015, with total box
office revenues reaching approximately
$11.1 billion.
12. Companies that operate movie
theatres are called ‘‘exhibitors.’’ Some
exhibitors own a single theatre, whereas
others own a circuit of theatres within
one or more regions of the United
States. AMC and Carmike are two of the
largest exhibitors in the United States.
13. Exhibitors set ticket prices for a
theatre based on a number of factors,
including the age and condition of the
theatre, the number and type of
amenities the theatre offers (such as the
range of snacks, food and beverages
offered, the size of its screens and
quality of its sound systems, and
whether it provides stadium and/or
reserved seating), competitive pressures
facing the theatre (such as the price of
tickets at nearby theatres, the age and
condition of those theatres, and the
number and types of amenities they
offer), and the population demographics
and density surrounding the theatre.
B. Preshow Services and Cinema
Advertising
14. On almost all movie screens,
before the previews and feature film
begin, the audience is presented with a
preshow—a video program consisting of
national, regional, and local
advertisements; special content
segments (e.g., a ‘‘behind the scenes’’
look at a new TV show); and theatre
announcements. The preshow is
typically twenty to thirty minutes long
and is designed to engage moviegoers as
they wait for the feature film to start.
15. Cinema advertising networks act
as intermediaries between exhibitors
and advertisers. For advertisers, the
preshow is a unique opportunity to
reach an attentive audience using a large
screen with the benefit of high-quality
video and sound. For exhibitors, the
preshow provides a lucrative way to
supplement revenue earned through
ticket sales and concessions at a time
when its movie screens screens are
otherwise unused.
16. To obtain preshow services,
exhibitors typically enter into long-term,
exclusive contracts with the cinema
advertising networks. The contracts for
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the largest few exhibitors, including
AMC and Carmike, tend to be longest—
approximately 30 years—whereas the
contracts for the smaller exhibitors tend
to last five to ten years. Under the
contracts, the networks commit to
marketing the preshow screen time to
advertisers and packaging the
advertisements and other content into
an entertaining video program.
Exhibitors agree to display the preshow
on their movie screens. The cinema
advertising networks retain a negotiated
portion of the advertising proceeds for
the services they provide, and the
exhibitors retain the remaining portion
of the advertising proceeds.
17. Cinema advertising networks sell
advertising time in preshows to
advertisers seeking to market their
products on a local, regional, or national
basis. Generally, national advertisers
seek to purchase cinema advertising
from firms that can provide access to a
nationwide network of movie screens.
Thus, the cinema advertising networks
work hard to enter into contracts with
exhibitors throughout the country and
compete vigorously to woo exhibitors
away from each other.
18. NCM and Screenvision are the
dominant cinema advertising networks
in the United States. They compete
head-to-head to win exclusive contracts
with exhibitors and to offer advertisers
access to their exhibitors’ movie
audiences. Together, NCM and
Screenvision serve over 80% of all
movie screens in the country.
19. NCM has a national cinema
advertising network that covers about
20,500 of the approximately 40,500
movie screens in the United States. In
2015, NCM earned approximately $447
million in gross advertising revenue.
20. National CineMedia, Inc. is the
managing member and owner of 43.6%
of NCM. The remaining 56.4% is owned
by the three largest exhibitors in the
United States: AMC (17.4%), Regal
Entertainment Group (‘‘Regal’’) (19.8%),
and Cinemark Holdings, Inc.
(‘‘Cinemark’’) (19.2%). Under NCM’s
governing documents, post-merger,
AMC ownership would increase to
approximately 26.5%.
21. Regal, Cinemark, and AMC (the
so-called ‘‘Founding Members’’)
exercise a significant degree of control
and influence over NCM and account
for approximately 83% of its screens. In
addition to holding a majority of NCM’s
equity, they have representatives on
NCM’s Board of Directors and enjoy
substantial governance rights, including
approval rights over certain NCM
contracts with competing exhibitors.
NCM management routinely consults
with executives of the Founding
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Members in making business decisions.
AMC can fill two seats on the NCM
board.
22. Screenvision has a national
cinema advertising network that covers
14,300 screens in more than 2,300
theatres. Carmike is by far the largest
exhibitor in Screenvision’s network,
and, as of September 30, 2016, owned
approximately 19% of Screenvision
through SV Holdco, LLC, a holding
company that owns and operates
Screenvision. Carmike also holds a seat
on Screenvision’s board of directors and
possesses certain governance rights. No
other major theatre exhibitor holds
significant equity interests in
Screenvision. Following the merger,
AMC plans to divest or convert
Carmike’s Screenvision shares such that
AMC will hold no more than 10% of
Screenvision’s voting stock.
V. Relevant Markets
A. The Exhibition of First-Run,
Commercial Movies in the Local
Markets
23. The exhibition of first-run,
commercial movies in the Local Markets
are relevant markets under Section 7 of
the Clayton Act, 15 U.S.C. 18.
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The Exhibition of First-Run,
Commercial Movies Product Market
24. Movies are a unique form of
entertainment. The experience of
viewing a movie in a theatre is an
inherently different experience from
live entertainment (e.g., a stage
production or attending a sporting
event) or viewing a movie in the home
(e.g., through streaming video, on a
DVD, or via pay-per-view).
25. Reflecting the significant
differences of viewing a movie in a
theatre, ticket prices for movies
generally differ from prices for other
forms of entertainment. For example,
typically, tickets for live entertainment
are significantly more expensive than a
movie ticket, whereas the costs of home
viewing through streaming video, a DVD
rental, or pay-per-view is usually
significantly less expensive than
viewing a movie in a theatre.
26. Viewing a movie at home differs
from viewing a movie in a theatre in
many ways. For example, the size of the
screens differ, the sophistication of the
sound systems differ, and, unlike at
home, in the theatre, one has the social
experience of viewing a movie with
other patrons.
27. In addition, the most popular
newly released or ‘‘first-run’’ movies are
not available for home viewing at the
time they are released in theatres.
Movies are considered to be in their
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‘‘first-run’’ during the four to five weeks
following initial release in a given
locality. If successful, a movie may be
exhibited at other theatres after the firstrun as part of a second or subsequent
run (often called a ‘‘sub-run’’ or
‘‘second-run’’).
28. Moviegoers generally do not
regard sub-run movies as an adequate
substitute for first-run movies.
Reflecting the significant difference
between viewing a newly released, firstrun movie and an older sub-run movie,
tickets at theatres exhibiting first-run
movies usually cost significantly more
than tickets at sub-run theatres.
29. Art movies and foreign-language
movies are also not reasonable
substitutes for commercial, first-run
movies. Art movies, which include
documentaries, are sometimes referred
to as independent films. Although art
and foreign-language movies appeal to
some viewers of commercial movies, art
and foreign-language movies tend to
have more narrow appeal and typically
attract an older audience than
commercial movies. Exhibitors consider
the operation of theatres that
predominantly exhibit art and foreignlanguage movies to be distinct from the
operation of theatres that predominantly
exhibit commercial movies.
30. A hypothetical monopolist
controlling the exhibition of all firstrun, commercial movies in a relevant
geographic market would profitably
impose at least a small but significant
and non-transitory increase (SSNIP) in
ticket prices. Thus, the exhibition of
first-run, commercial movies is a
relevant product market and line of
commerce under Section 7 of the
Clayton Act in which to assess the
competitive effects of this acquisition.
Relevant Geographic Markets for the
Exhibition of First-Run, Commercial
Movies
31. Moviegoers typically are not
willing to travel very far from their
home to attend a movie. As a result,
geographic markets for the exhibition of
first-run, commercial movies are
relatively local. Each of the following
areas is a relevant geographic market
and section of the country for purposes
of Section 7 of the Clayton Act.
Area In and Around Montgomery,
Alabama
32. AMC and Carmike account for all
of the first-run, commercial movie box
office revenue in and around
Montgomery, Alabama. The only
theatres that predominantly show firstrun commercial movies in this area are
the Carmike Chantilly 13 BigD, the
Carmike Promenade 12, and the AMC
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Festival Plaza 16. No other
predominately first-run, commercial
movie theatre is in the vicinity of the
AMC and Carmike theatres.
33. Moviegoers who reside in and
around Montgomery, Alabama are
unlikely to travel significant distances
out of that area to attend a first-run,
commercial movie. A small but
significant increase in the price of
tickets by a hypothetical monopolist of
first-run, commercial movie theatres in
this area would likely not cause a
sufficient number of moviegoers to
travel out of that area to make the
increase unprofitable. The area in and
around Montgomery, Alabama
constitutes a relevant geographic market
in which to assess the competitive
effects of this acquisition.
Area In and Around Destin and Miramar
Beach, Florida
34. AMC and Carmike account for all
of the first-run, commercial movie box
office revenue in and around Destin and
Miramar Beach, Florida. The only
theatres that predominantly show firstrun commercial movies in this area are
the AMC Destin Commons 14 and the
Carmike Boulevard 10 BigD. No other
predominantly first-run, commercial
movie theatre is in the vicinity of the
AMC and Carmike theatres.
35. Moviegoers who reside in and
around Destin and Miramar Beach,
Florida are unlikely to travel significant
distances out of that area to attend a
first-run, commercial movie. A small
but significant increase in the price of
tickets by a hypothetical monopolist of
first-run, commercial movie theatres in
this area would likely not cause a
sufficient number of moviegoers to
travel out of that area to make the
increase unprofitable. The area in and
around Destin and Miramar Beach,
Florida constitutes a relevant geographic
market in which to assess the
competitive effects of this acquisition.
Area In and Around Orange Park and
Fleming Island, Florida
36. AMC and Carmike account for the
majority of the first-run, commercial
movie box office revenue in and around
Orange Park and Fleming Island,
Florida. The only theatres that
predominantly show first-run
commercial movies in this area are the
Carmike Fleming Island 12, the AMC
Orange Park 24, and the EPIC Theater at
Oakleaf. Other than the EPIC Theater,
no other first-run, commercial movie
theatre is in the vicinity of the Carmike
and AMC theatres.
37. Moviegoers who reside in and
around Orange Park and Fleming Island,
Florida are unlikely to travel significant
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distances out of that area to attend a
first-run, commercial movie. A small
but significant increase in the price of
tickets by a hypothetical monopolist of
first-run, commercial movie theatres in
this area would likely not cause a
sufficient number of moviegoers to
travel out of that area to make the
increase unprofitable. The area in and
around Orange Park and Fleming Island,
Florida constitutes a relevant geographic
market in which to assess the
competitive effects of this acquisition.
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Area In and Around Cumming, Georgia
38. AMC and Carmike account for the
majority of the first-run, commercial
movie box office revenue in and around
Cumming, Georgia. The only theatres
that predominantly show first-run
commercial movies in this area are the
Carmike Movies 400 12, the AMC
Avenue Forsyth 12, and the Regal
Avalon 12. Other than the Regal Avalon
12, no other predominantly first-run,
commercial movie theatre is in the
vicinity of the Carmike and AMC
theatres.
39. Moviegoers who reside in and
around Cumming, Georgia are unlikely
to travel significant distances out of that
area to attend a first-run, commercial
movie. A small but significant increase
in the price of tickets by a hypothetical
monopolist of first-run, commercial
movie theatres in this area would likely
not cause a sufficient number of
moviegoers to travel out of that area to
make the increase unprofitable. The area
in and around Cumming, Georgia
constitutes a relevant geographic market
in which to assess the competitive
effects of this acquisition.
Area In and Around Lithonia and
Conyers, Georgia
40. AMC and Carmike account for all
of the first-run, commercial movie box
office revenue in and around Lithonia
and Conyers, Georgia. The only theatres
that predominantly show first-run
commercial movies in this area are the
Carmike Conyers Crossing 16 and the
AMC Stonecrest Mall 16. No other
predominately first-run, commercial
movie theatre is in the vicinity of the
AMC and Carmike theatres.
41. Moviegoers who reside in and
around Lithonia and Conyers, Georgia
are unlikely to travel significant
distances out of that area to attend a
first-run, commercial movie. A small
but significant increase in the price of
tickets by a hypothetical monopolist of
first-run, commercial movie theatres in
this area would likely not cause a
sufficient number of moviegoers to
travel out of that area to make the
increase unprofitable. The area in and
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around Lithonia and Conyers, Georgia
constitutes a relevant geographic market
in which to assess the competitive
effects of this acquisition.
Area In and Around Crestwood and
Lansing, Illinois
42. AMC and Carmike account for the
majority of the first-run, commercial
movie box office revenue in and around
Crestwood and Lansing, Illinois. The
only theatres that predominantly show
first-run commercial movies in this area
are the Carmike Digiplex Lansing 8, the
AMC Crestwood 18, the AMC
Schererville 12, the AMC Schererville
16, the Marcus Country Club Hills
Cinema, the Marcus Chicago Heights
Cinema, the Studio Movie Grill
Chatham, and the Hoosier Theater.
Other than the Marcus Country Club
Hills Cinema, the Marcus Chicago
Heights Cinema, the Studio Movie Grill
Chatham, and the Hoosier Theater, no
other predominantly first-run,
commercial movie theatre is in the
vicinity of the Carmike and AMC
theatres.
43. Moviegoers who reside in and
around Crestwood and Lansing, Illinois
are unlikely to travel significant
distances out of that area to attend a
first-run, commercial movie. A small
but significant increase in the price of
tickets by a hypothetical monopolist of
first-run, commercial movie theatres in
this area would likely not cause a
sufficient number of moviegoers to
travel out of that area to make the
increase unprofitable. The area in and
around Crestwood and Lansing, Illinois
constitutes a relevant geographic market
in which to assess the competitive
effects of this acquisition.
Area In and Around Normal and
Bloomington, Illinois
44. AMC and Carmike account for the
majority of the first-run, commercial
movie box office revenue in and around
Normal and Bloomington, Illinois. The
only theatres that predominantly show
first-run commercial movies in this area
are the Carmike Ovation 10, the AMC
Normal 14, and the Wehrenberg
Bloomington Galaxy 14 Cinema. Other
than the Wehrenberg Bloomington
Galaxy 14 Cinema, no other
predominantly first-run, commercial
movie theatre is in the vicinity of the
AMC and Carmike theatres.
45. Moviegoers who reside in and
around Normal and Bloomington,
Illinois are unlikely to travel significant
distances out of that area to attend a
first-run, commercial movie. A small
but significant increase in the price of
tickets by a hypothetical monopolist of
first-run, commercial movie theatres in
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this area would likely not cause a
sufficient number of moviegoers to
travel out of that area to make the
increase unprofitable. The area in and
around Normal and Bloomington,
Illinois constitutes a relevant geographic
market in which to assess the
competitive effects of this acquisition.
Area In and Around Pekin, Peoria, and
Washington, Illinois
46. AMC and Carmike account for the
majority of the first-run, commercial
movie box office revenue in and around
Pekin, Peoria, and Washington, Illinois.
The only theatres that predominantly
show first-run commercial movies in
this area are the Carmike Sunnyland 10,
the Carmike Grand Prairie 18, the AMC
Pekin 14, the Goodrich Willow Knolls
14, the Morton Cinema, and the
Landmark Cinemas. Other than the
Goodrich Willow Knolls, the Morton
Cinema, and the Landmark Cinemas, no
predominantly first-run, commercial
movie theatre is in the vicinity of the
AMC and Carmike theatres.
47. Moviegoers who reside in and
around Pekin, Peoria, and Washington,
Illinois are unlikely to travel significant
distances out of that area to attend a
first-run, commercial movie. A small
but significant increase in the price of
tickets by a hypothetical monopolist of
first-run, commercial movie theatres in
this area would likely not cause a
sufficient number of moviegoers to
travel out of that area to make the
increase unprofitable. The area in and
around Pekin, Peoria, and Washington,
Illinois constitutes a relevant geographic
market in which to assess the
competitive effects of this acquisition.
Area In and Around Inver Grove Heights
and Oakdale, Minnesota
48. AMC and Carmike account for
nearly a majority of the first-run,
commercial movie box office revenue in
and around Inver Grove Heights and
Oakdale, Minnesota. The only theatres
that predominantly show first-run
commercial movies in this area are the
AMC Inver Grove 16, the Carmike
Oakdale 20, the Woodbury 10, and the
Marcus Oakdale 17. Other than the
Woodbury 10 and the Marcus Oakdale
17, no other predominantly first-run,
commercial movie theatre is in the
vicinity of the Carmike and AMC
theatres.
49. Moviegoers who reside in and
around Inver Grove Heights and
Oakdale, Minnesota are unlikely to
travel significant distances out of that
area to attend a first-run, commercial
movie. A small but significant increase
in the price of tickets by a hypothetical
monopolist of first-run, commercial
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movie theatres in this area would likely
not cause a sufficient number of
moviegoers to travel out of that area to
make the increase unprofitable. The area
in and around Inver Grove Heights and
Oakdale, Minnesota constitutes a
relevant geographic market in which to
assess the competitive effects of this
acquisition.
srobinson on DSK5SPTVN1PROD with NOTICES
Area In and Around Coon Rapids and
Mounds View, Minnesota
50. AMC and Carmike account for the
majority of the first-run, commercial
movie box office revenue in and around
Coon Rapids and Mounds View,
Minnesota. The only theatres that
predominantly show first-run
commercial movies in this area are the
AMC Coon Rapids 16, the AMC Arbor
Lakes, the Carmike Wynnsong 15, the
Andover 10, the Regal Brooklyn Center
20, and the Mann Champlin. Other than
the Andover 10, the Regal Brooklyn
Center 20, and the Mann Champlin, no
other predominantly first-run,
commercial movie theatre is in the
vicinity of the Carmike and AMC
theatres.
51. Moviegoers who reside in and
around Coon Rapids and Mounds View,
Minnesota are unlikely to travel
significant distances out of that area to
attend a first-run, commercial movie. A
small but significant increase in the
price of tickets by a hypothetical
monopolist of first-run, commercial
movie theatres in this area would likely
not cause a sufficient number of
moviegoers to travel out of that area to
make the increase unprofitable. The area
in and around Coon Rapids and Mounds
View, Minnesota constitutes a relevant
geographic market in which to assess
the competitive effects of this
acquisition.
Area In and Around Rockaway and
Sparta, New Jersey
52. AMC and Carmike account for all
of the first-run, commercial movie box
office revenue in and around Rockaway
and Sparta, New Jersey. The only
theatres that predominantly show firstrun commercial movies in this area are
the Carmike Digiplex Sparta 3 and the
AMC Rockaway 16. No other
predominantly first-run, commercial
movie theatre is in the vicinity of the
Carmike and AMC theatres.
53. Moviegoers who reside in and
around Rockaway and Sparta, New
Jersey are unlikely to travel significant
distances out of that area to attend a
first-run, commercial movie. A small
but significant increase in the price of
tickets by a hypothetical monopolist of
first-run, commercial movie theatres in
this area would likely not cause a
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sufficient number of moviegoers to
travel out of that area to make the
increase unprofitable. The area in and
around Rockaway and Sparta, New
Jersey constitutes a relevant geographic
market in which to assess the
competitive effects of this acquisition.
Area In and Around Westfield and
Cranford, New Jersey
54. AMC and Carmike account for the
majority of the first-run, commercial
movie box office revenue in and around
Westfield and Cranford, New Jersey.
Carmike operates two first-run,
commercial movie theatres in the area:
the Digiplex Rialto Westfield and the
Digiplex Cranford 5. AMC operates five
theaters in the area: the Mountainside
10, the Aviation 12, the Jersey Gardens
20, the Menlo Park 12, and the Essex
Green 9. While there are several other
first-run, commercial movie theatres
operating in the vicinity of the AMC and
Carmike theatres in the area, AMC and
Carmike are first and fourth,
respectively, in term of the number of
screens and box office revenue.
55. Moviegoers who reside in and
around Westfield and Cranford, New
Jersey are unlikely to travel significant
distances out of that area to attend a
first-run, commercial movie. A small
but significant increase in the price of
tickets by a hypothetical monopolist of
first-run, commercial movie theatres in
this area would likely not cause a
sufficient number of moviegoers to
travel out of that area to make the
increase unprofitable. The area in and
around Westfield and Cranford, New
Jersey constitutes a relevant geographic
market in which to assess the
competitive effects of this acquisition.
Area In and Around Lawton, Oklahoma
56. AMC and Carmike account for all
of the first-run, commercial movie box
office revenue in and around Lawton,
Oklahoma. The only theatres that
predominantly show first-run
commercial movies in this area are the
Carmike Patriot 13 and the AMC Lawton
12. No other predominately first-run,
commercial movie theatre is in the
vicinity of the Carmike and AMC
theatres.
57. Moviegoers who reside in and
around Lawton, Oklahoma are unlikely
to travel significant distances out of that
area to attend a first-run, commercial
movie. A small but significant increase
in the price of tickets by a hypothetical
monopolist of first-run, commercial
movie theatres in this area would likely
not cause a sufficient number of
moviegoers to travel out of that area to
make the increase unprofitable. The area
in and around Lawton, Oklahoma
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constitutes a relevant geographic market
in which to assess the competitive
effects of this acquisition.
Area In and Around Allentown and
Center Valley, Pennsylvania
58. AMC and Carmike account for all
of the first-run, commercial movie box
office revenue in and around Allentown
and Center Valley, Pennsylvania. The
only theatres that predominantly show
first-run commercial movies in this area
are the Carmike Promenade 16 IMAX,
the Carmike Promenade 16, and the
AMC Tilghman Square 8. No other
predominately first-run, commercial
movie theatre is in the vicinity of the
Carmike and AMC theatres.
59. Moviegoers who reside in and
around Allentown and Center Valley,
Pennsylvania are unlikely to travel
significant distances out of that area to
attend a first-run, commercial movie. A
small but significant increase in the
price of tickets by a hypothetical
monopolist of first-run, commercial
movie theatres in this area would likely
not cause a sufficient number of
moviegoers to travel out of that area to
make the increase unprofitable. The area
in and around Allentown and Center
Valley, Pennsylvania constitutes a
relevant geographic market in which to
assess the competitive effects of this
acquisition.
Area In and Around Madison and
Fitchburg, Wisconsin
60. AMC and Carmike account for the
majority of the first-run, commercial
movie box office revenue in and around
Madison and Fitchburg, Wisconsin. The
only theatres that predominantly show
first-run commercial movies in this area
are the Carmike Sundance Madison 6,
the AMC Fitchburg 18, and the Marcus
Point Cinema 15. Other than the Marcus
Point Cinema 15, no predominately
first-run, commercial movie theatre is in
the vicinity of the AMC and Carmike
theatres.
61. Moviegoers who reside in and
around Madison and Fitchburg,
Wisconsin are unlikely to travel
significant distances out of that area to
attend a first-run, commercial movie. A
small but significant increase in the
price of tickets by a hypothetical
monopolist of first-run, commercial
movie theatres in this area would likely
not cause a sufficient number of
moviegoers to travel out of that area to
make the increase unprofitable. The area
in and around Madison and Fitchburg,
Wisconsin constitutes a relevant
geographic market in which to assess
the competitive effects of this
acquisition.
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B. Preshow Services and Cinema
Advertising in the United States
62. Preshow services sold to
exhibitors and cinema advertising sold
to advertisers in the United States are
relevant markets under Section 7 of the
Clayton Act, 15 U.S.C. § 18.
Preshow Services and Cinema
Advertising Product Markets
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i. Preshow Services
63. Preshow services consist of the
packaging of advertisements and
content into a preshow delivered to
exhibitors, enabling them to earn
revenue from the use of their screens
before the feature film. The price
charged to exhibitors for preshow
services is the portion of advertising
revenue retained by the network.
64. The sale of preshow services to
exhibitors constitutes a relevant product
market and line of commerce under
Section 7 of the Clayton Act. There are
no reasonable substitutes for preshow
services. Exhibitors cannot easily
replace the preshow services that they
buy from cinema advertising networks
because individual exhibitors generally
lack sufficient screens and geographic
reach to secure national advertising. Nor
can exhibitors sufficiently replace
national advertising in preshows with
local and regional advertising because
local and regional advertising generates
far less revenue than national
advertising. Because there are no
reasonable substitutes for preshow
services, a hypothetical monopolist of
all such services could profitably
impose a SSNIP. Thus, the market for
preshow services is a relevant product
market in which to assess the
competitive effects of this acquisition.
ii. Cinema Advertising
65. Cinema advertising is the onscreen advertising incorporated in the
preshow. The sale of cinema advertising
to advertisers is a relevant product
market and line of commerce under
Section 7 of the Clayton Act. Cinema
advertising has important attributes that
differentiate it from other forms of video
advertising. For example, the preshow is
projected on a large screen with highquality video and sound in a darkened
auditorium. In contrast to TV and other
video advertising platforms, the
audience cannot avoid the
advertisements by fast forwarding
through them, clicking past them, or
changing a channel. The preshow also
allows for long-form advertisements
typically not available on TV, and it
reaches a weekend audience and light
TV viewers who are otherwise difficult
to reach.
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66. Many advertisers value the
combination of attributes afforded by
cinema advertising, and few would
switch to other forms of video
advertising in response to a SSNIP of
cinema advertising. A hypothetical
monopolist over all cinema advertising
would profitably impose a SSNIP and,
thus, the market for cinema advertising
is a relevant product market in which to
assess the competitive effects of this
acquisition.
Relevant Geographic Market for
Preshow Services and Cinema
Advertising
67. NCM and Screenvision compete
with each other throughout the United
States. Exhibitors and advertisers in the
United States would not switch to
cinema advertising networks located
outside of the United States in the event
of a SSNIP in the United States.
Accordingly, the United States is a
relevant geographic market for preshow
services sold to exhibitors and for
cinema advertising sold to advertisers
within the meaning of Section 7 of the
Clayton Act.
VI. COMPETITIVE EFFECTS
A. Exhibition of First-Run,
Commercial Movies in the Local
Markets
68. Exhibitors compete to attract
moviegoers to their theatres over the
theatres of their rivals. They do that by
competing on price, knowing that if
they charge too much (or do not offer
sufficient discounted tickets for
matinees, seniors, students, or children)
moviegoers will begin to frequent their
rivals’ theatres. Exhibitors also compete
by seeking to license the first-run
movies that are likely to attract the
largest numbers of moviegoers. In
addition, exhibitors compete over the
quality of the viewing experience by
offering moviegoers the most
sophisticated sound systems, largest
screens, best picture clarity, best seating
(including stadium, reserved, and
recliner seating), and the broadest
variety and highest quality snacks, food,
´
and drinks at concession stands or cafes
in the lobby or served to moviegoers at
their seats.
69. AMC and Carmike currently
compete for moviegoers in the Local
Markets. These markets are highly
concentrated, and in each market, AMC
and Carmike are significant competitors,
given their close proximity. Their
rivalry spurs each to improve the
quality of its theatres and keeps ticket
prices in check.
70. In each of the Local Markets,
AMC’s acquisition of Carmike will lead
to significant increases in concentration
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and eliminate existing competition
between AMC and Carmike.
71. Market concentration is often a
useful indicator of the level of
competitive vigor in a market and the
likely competitive effects of a merger.
The more concentrated a market, and
the more a transaction would increase
that concentration, the more likely it is
that the transaction would result in
reduced competition, harming
consumers. Market concentration
commonly is measured by the
Herfindahl-Hirschman Index (‘‘HHI’’),
as discussed in Appendix A. Markets in
which the HHI exceeds 2,500 points are
considered highly concentrated, and
transactions that increase the HHI by
more than 200 points in highly
concentrated markets are presumed
likely to enhance market power.
72. All of the Local Markets are highly
concentrated and will experience
significant HHI increases as a result of
the transaction. In each of the Local
Markets, the proposed acquisition
would give AMC control of at least half,
and sometimes all, of the first-run,
commercial movie theatre screens and
between 48% and 100% of the annual
box office revenues. In each of the Local
Markets, the acquisition would yield
post-acquisition HHIs of between 3,800
and 10,000, representing increases in
the range of 600 to 5,000 points.
73. Today, were one of Defendants’
theatres to increase unilaterally ticket
prices in each of Local Markets, the
exhibitor that increased price would
likely suffer financially as a substantial
number of its customers would
patronize the other exhibitor. The
acquisition would eliminate this pricing
constraint. Thus, the acquisition is
likely to lead to higher ticket prices for
moviegoers, which could take the form
of a higher adult evening ticket price or
reduced discounting for matinees,
children, seniors, or students.
74. The proposed acquisition likely
would also reduce competition between
AMC and Carmike over the quality of
the viewing experience at the theatres in
the Local Markets. If no longer
motivated to compete, AMC and
Carmike would have reduced incentives
to maintain, upgrade, and renovate their
theatres, to improve the theatres’
amenities and services, or to license the
most popular movies, thus reducing the
quality of the viewing experience for
moviegoers in the Local Markets.
75. For all of these reasons, AMC’s
acquisition of Carmike likely will result
in a substantial lessening of competition
in each of the Local Markets.
B. Preshow Services and Cinema
Advertising in the United States
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76. The proposed transaction also
would likely substantially lessen
competition in the markets for the sale
of preshow services to exhibitors and
the sale of cinema advertising to
advertisers in the United States.
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AMC’s Simultaneous Ownership of
Equity Interests in NCM and
Screenvision Will Likely Substantially
Lessen Competition
77. As a significant owner of equity
interests in both NCM and Screenvision
post-merger, AMC would have an
incentive to reduce the head-to-head
competition between NCM and
Screenvision. AMC will not benefit from
strong competition between NCM and
Screenvision post-merger because the
competition will lower the profits AMC
earns from NCM and Screenvision
through its ownership interest.
78. In light of this incentive, AMC
will likely use its influence and
governance rights in both companies to
ensure that NCM and Screenvision
compete less aggressively to sign
contracts with exhibitors and
advertisers at the expense of the other
network. AMC will also have the ability
to use its access to confidential,
nonpublic, and trade secret information
from NCM and Screenvision to facilitate
collusion by passing that competitively
sensitive information between NCM and
Screenvision.
79. The lessening of competition
between NCM and Screenvision will
likely result in lower payments to
exhibitors and/or lower quality
preshows for exhibitors. Given that
NCM and Screenvision control over
80% of screens in the United States, it
would be difficult for exhibitors to
substitute to other, smaller networks.
80. Additionally, as a result of this
lessening of competition, advertisers
will no longer benefit from the lower
prices that have resulted from the
competition between NCM and
Screenvision. Advertisers do not have
choices other than these two networks
to reach a broad number of viewers of
their cinema advertising.
The Merger Will Likely Substantially
Lessen Competition in Both Markets
Because It Will Likely Weaken
Screenvision’s Ability to Compete
81. The loss of an independent
Carmike also likely would weaken
Screenvision’s ability to remain a
robust, competitive check on NCM, the
only other significant competitor in the
preshow services and cinema
advertising markets. Scale is an
important element of competition for
advertisers and, in turn, for exhibitors.
Carmike is Screenvision’s largest
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exhibitor, and Screenvision touts the
Carmike theatre network’s current,
broad scale when competing to execute
deals with advertisers and exhibitors.
82. Screenvision also relies on
Carmike’s expansion plans to maintain
and possibly expand the scale of its
network of screens. Under Carmike’s
contract with Screenvision, all newlyacquired or -built Carmike theatres that
have a preshow are automatically
assigned to the Screenvision network.
As a result, Carmike has fueled much of
Screenvision’s growth in recent years
through its acquisitions of existing
theatres and new theatre builds. This
growth is important to maintaining scale
since exhibitors, including Carmike,
periodically close theaters that are no
longer economically viable.
Additionally, Screenvision’s scale is at
risk as the industry consolidates and
more of the exhibitors with which it had
previously contracted migrate to the
contracts between NCM and its
Founding Members: AMC, Regal, and
Cinemark.
83. NCM’s Founding Members and
Carmike are the only exhibitors that
have made significant acquisitions as
the exhibitor industry has been
consolidating. These exhibitors have
long-term exclusive contracts with
either NCM or Screenvision. If AMC
acquires Carmike, the AMC/NCM
exclusive arrangement will be expanded
to Carmike and all of the merged firm’s
future theatre acquisitions and new
builds will affiliate with NCM.
Screenvision will lose access to its only
substantial source of theatre
acquisitions and the number of
independent exhibitors unencumbered
by long-term exclusive dealing
arrangements for which Screenvision
can compete will shrink even more as
industry consolidation continues.
Screenvision will only be able to rely on
the other, smaller exhibitors for theatre
acquisitions or new builds to maintain
its network scale. These exhibitors will
be unable to replace the growth that
Carmike would have likely provided in
the absence of the merger.
84. Competition will be lessened in
the preshow services and cinema
advertising markets because the merger
will weaken one of the only two
competitors. In the preshow services
market, because NCM and Screenvision
closely monitor each other and battle for
market share, the competition between
them provides tangible benefits for
exhibitors with respect to price and
quality of preshows. The proposed
merger would likely substantially lessen
the competition between NCM and
Screenvision that has yielded these
benefits, potentially forcing exhibitors
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to raise prices to consumers or forgo
theatre improvements to offset the
resulting reduction in revenue that they
earn from preshows.
85. In the cinema advertising market,
the resulting lessening of competition
from the proposed acquisition would
negatively impact advertisers, who pay
NCM and Screenvision to place their
ads in the movie preshows. Currently,
advertisers benefit from competition
between NCM and Screenvision for the
placement of their ads. The proposed
merger would likely substantially lessen
the competition between NCM and
Screenvision that has yielded these
benefits, likely forcing advertisers to pay
higher prices or accept lower quality
placement of their advertising in the
movie pre-shows.
VII. ENTRY
86. Sufficient, timely entry that would
deter or counteract the anticompetitive
effects in the relevant markets alleged
above is unlikely. Exhibitors are
reluctant to locate new, first-run,
commercial theatres near existing, firstrun, commercial theatres unless the
population density, demographics, or
the quality of existing theatres makes
new entry viable. Timely entry of new,
first-run, commercial movie theatres in
the areas in and around the Local
Markets would be unlikely to defeat a
price increase by the merged firm.
87. Additionally, the entry barriers
associated with developing a cinema
advertising network are high, and thus
new entry or expansion by existing
competitors is unlikely to prevent or
remedy the proposed merger’s likely
anticompetitive effects in the preshow
services and cinema advertising
markets. Barriers to entry and expansion
include the time and cost of developing
a network of screens to achieve
sufficient scale. NCM’s and
Screenvision’s lock-up of almost all of
the exhibitors in the United States
through staggered long-term contracts
makes entry a long process. This adds
to the already high cost of building the
infrastructure necessary to develop and
attract national advertisers. It also
increases the length of time an entrant
must sustain losses before its scale is
large enough to sell advertising at longterm profitable rates.
88. Exhibitors generally cannot
supply preshow services themselves to
replace the likely substantial lessening
of competition in the preshow services
market. Individual exhibitors or groups
of small exhibitors whose contracts with
NCM or Screenvision are expiring are
unlikely to be able to establish costeffective sales forces, attract national
advertisers, or otherwise develop a
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sufficient infrastructure to reasonably
replace lost competition.
VIII. VIOLATION ALLEGED
89. Plaintiff hereby reincorporates
paragraphs 1 through 88.
90. The likely effect of AMC’s
proposed acquisition of Carmike would
be to substantially lessen competition in
each of the relevant markets identified
above in violation of Section 7 of the
Clayton Act, 15 U.S.C. 18.
91. Unless enjoined, the proposed
transaction would likely have the
following effects, among others:
(a) the prices of tickets at first-run,
commercial movie theatres in the areas
in and around the Local Markets would
likely increase above levels that would
prevail absent the acquisition;
(b) the quality of first-run, commercial
theatres and the viewing experience at
those theatres in the Local Markets
would likely decrease below levels that
would prevail absent the acquisition;
(c) the quality of and revenues from
preshow services provided to exhibitors
would likely decrease below levels that
would prevail absent the acquisition;
and
(d) the cost to place ads in theatre
preshows to advertisers will likely
increase to levels above, and the quality
of advertising will decrease to levels
below, those that would prevail absent
the acquisition.
IX. REQUESTED RELIEF
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92. Plaintiff requests that:
(a) AMC’s proposed acquisition of
Carmike be adjudged to violate Section
7 of the Clayton Act, 15 U.S.C. 18;
(b) Defendants be permanently
enjoined from and restrained from
carrying out the proposed acquisition or
any other transaction that would
combine the two companies;
(c) Plaintiff be awarded its costs of
this action; and
(d) Plaintiff be awarded such other
reliefs as the Court may deem just and
proper.
Dated: 12/20/2016.
For Plaintiff United States of America
/s/ llllllll
Renata B. Hesse (D.C. Bar #466107),
Acting Assistant Attorney General.
/s/ llllllll
Jonathan B. Sallet,
Deputy Assistant Attorney General.
/s/ llllllll
Patricia A. Brink,
Director of Civil Enforcement.
/s/ llllllll
Owen M. Kendler,
Acting Chief, Litigation III.
Yvette F. Tarlov,
Lisa A. Scanlon,
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Assistant Chiefs, Litigation III.
/s/ llllllll
Gregg I. Malawer (D.C. Bar #481685)
Miriam R. Vishio (D.C. Bar #482282)
Mona S.K. Haar (D.C. Bar #98789)
Justin M. Dempsey (D.C. Bar #425976),
Trial Attorneys, Litigation III.
U.S. Department of Justice, Antitrust
Division, 450 5th Street NW., Suite 4000,
Washington, DC 20530, Fax: (202) 514–7308,
Telephone: Gregg Malawer (202) 616–5943,
E-mail: gregg.malawer@usdoj.gov,
Telephone: Miriam Vishio (202) 598–8091, Email: miriam.vishio@usdoj.gov.
APPENDIX A
Herfindahl-Hirschman Index
The term ‘‘HHI’’ means the HerfindahlHirschman Index, a commonly accepted
measure of market concentration. The HHI is
calculated by squaring the market share of
each firm competing in the relevant market
and then summing the resulting numbers.
For example, for a market consisting of four
firms with shares of 30, 30, 20, and 20
percent, the HHI is 2,600 (302 + 302 + 202
+ 202 = 2,600). The HHI takes into account
the relative size distribution of the firms in
a market. It approaches zero when a market
is occupied by a large number of firms of
relatively equal size, and reaches its
maximum of 10,000 points when a market is
controlled by a single firm. The HHI
increases both as the number of firms in the
market decreases and as the disparity in size
between those firms increases.
Markets in which the HHI is between 1,500
and 2,500 points are considered to be
moderately concentrated, and markets in
which the HHI is in excess of 2,500 points
are considered to be highly concentrated. See
U.S. Department of Justice & Federal Trade
Commission, Horizontal Merger Guidelines
§ 5.3 (2010) (‘‘Guidelines’’). Transactions that
increase the HHI by more than 200 points in
highly concentrated markets presumptively
raise antitrust concerns under the Guidelines.
Id.
United States District Court for the
District of Columbia
United States of America Plaintiff, v.
AMC Entertainment Holdings, Inc., and
Carmike Cinemas, Inc., Defendants.
Case No.: 1:16–cv–02475
Judge: Randolph D. Moss
Filed: 12/20/2016
COMPETITIVE IMPACT STATEMENT
Plaintiff, United States of America,
pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (‘‘APPA’’
or ‘‘Tunney Act’’), 15 U.S.C. § 16(b)–(h),
files this Competitive Impact Statement
relating to the proposed Final Judgment
submitted for entry in this civil antitrust
proceeding.
I. NATURE AND PURPOSE OF
PROCEEDING
On March 3, 2016, Defendant AMC
Entertainment Holdings, Inc. (‘‘AMC’’)
agreed to acquire all of the outstanding
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96493
voting securities of Defendant Carmike
Cinemas, Inc. (‘‘Carmike’’). AMC and
Carmike are the second-largest and
fourth-largest movie theatre circuits,
respectively, in the United States.
AMC owns significant equity in
National CineMedia, LLC (‘‘NCM’’) and
Carmike owns significant equity in SV
Holdco, LLC, a holding company that
owns and operates Screenvision
Exhibition, Inc. (collectively
‘‘Screenvision’’). NCM and Screenvision
are the country’s two main, preshow
cinema advertising networks, covering
over 80% of movie theatre screens in
the United States.
The United States filed a civil
antitrust complaint on December 20,
2016, seeking to enjoin the proposed
acquisition and to obtain equitable
relief. The Complaint alleges that the
acquisition, if permitted to proceed,
would give AMC direct control of one
of its most significant movie theatre
competitors, and in some cases, its only
competitor, in 15 local markets
(identified as the ‘‘Local Markets’’ in the
Complaint) 1 in nine states. Moviegoers
would likely experience higher ticket
and concession prices and lower quality
services in these local markets as a
consequence.
The Complaint further alleges that
because AMC will hold sizable interests
in both NCM and Screenvision posttransaction, and Screenvision will lose
Carmike as a source of future growth of
its network, the acquisition would
substantially lessen competition in the
markets for preshow services and
cinema advertising. This loss of
competition likely would result in
increased prices and reduced services
for advertisers and theatre exhibitors
seeking preshow services.
The likely effect of AMC’s acquisition
of Carmike will be to substantially
lessen competition in the exhibition of
first-run, commercial movies in the 15
Local Markets, and in the sale of
preshow services and cinema
advertising on a nationwide basis, in
violation of Section 7 of the Clayton
Act, 15 U.S.C. § 18.
At the same time the Complaint was
filed, the United States also filed a Hold
Separate Stipulation and Order (‘‘Hold
1 As alleged in the Complaint, the 15 Local
Markets are Montgomery, Alabama; Destin and
Miramar Beach, Florida; Orange Park and Fleming
Island, Florida; Cumming, Georgia; Lithonia and
Conyers, Georgia; Crestwood and Lansing, Illinois;
Normal and Bloomington, Illinois; Pekin, Peoria,
and Washington, Illinois; Inver Grove Heights and
Oakdale, Minnesota; Coon Rapids and Mounds
View, Minnesota; Rockaway and Sparta, New
Jersey; Westfield and Cranford, New Jersey; Lawton,
Oklahoma; Allentown and Center Valley,
Pennsylvania; and Madison and Fitchburg,
Wisconsin.
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Separate’’) and a proposed Final
Judgment. Under the terms of the
proposed Final Judgment, which is
explained more fully below, AMC is
required to take certain actions that are
designed to eliminate the
anticompetitive effects that are likely to
result from AMC’s acquisition of
Carmike. Specifically, the Defendants
are required to: (1) Divest movie theatres
in the 15 Local Markets where it and
Carmike are direct competitors; (2) sell
down its equity interest in NCM such
that it owns no more than 4.99%; (3)
relinquish its seats on NCM’s Board of
Directors and all other governance rights
it holds in NCM, (4) transfer 24 theaters
with a total of 384 screens to the
Screenvision cinema advertising
network and divest any of those theatres
it does not successfully transfer; and (5)
implement and maintain ‘‘firewalls’’ to
further ensure that it does not obtain
NCM’s, Screenvision’s, or other
exhibitors’ competitively sensitive
information or become a conduit for the
flow of such information between NCM
and Screenvision.
The United States and Defendants
have stipulated that the proposed Final
Judgment may be entered after
compliance with the APPA. Entry of the
proposed Final Judgment would
terminate this action, except that the
Court would retain jurisdiction to
construe, modify, or enforce the
provisions of the proposed Final
Judgment and to punish violations
thereof.
II. DESCRIPTION OF THE EVENTS
GIVING RISE TO THE ALLEGED
VIOLATION
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A. Defendants and the Proposed
Transaction
Defendant AMC is a Delaware
corporation with its headquarters in
Leawood, Kansas. As of September 30,
2016, AMC operated approximately 388
theatres with a total of 5,295 screens
located across 31 states and the District
of Columbia. AMC reported
approximately $1.89 billion in U.S. box
office revenues in 2015 and
approximately $1.46 billion in U.S. box
office revenues for the first nine months
of 2016. Measured by number of
theatres, screens, and box office
revenue, AMC is the second-largest
theatre circuit in the United States.
AMC is one of the three founders of
the NCM cinema advertising network,
owns 17.4% of NCM, controls two seats
on NCM’s Board of Directors, and has
certain governance rights over NCM.
AMC’s ownership interest in NCM will
increase to 26.5% after it acquires
Carmike.
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Defendant Carmike is a Delaware
corporation with its headquarters in
Columbus, Georgia. As of September 30,
2016, Carmike operated approximately
271 movie theatres with a total of 2,917
screens located across 41 states.
Carmike reported approximately $490.0
million in U.S. box office revenues in
2015, and approximately $370.8 million
in U.S. box office revenue for the first
nine months of 2016. Measured by
number of theatres, screens, and box
office revenue, Carmike is the fourthlargest theatre circuit in the United
States.
Carmike is the largest theatre circuit
in the Screenvision cinema advertising
network. It also owns approximately
19% of Screenvision, controls a seat on
Screenvision’s Board of Directors, and
has certain governance rights over
Screenvision.
B. The Competitive Effects of the
Transaction on the Exhibition of
First-Run, Commercial Movies
1. The Relevant Markets
As alleged in the Complaint, movies
are a unique form of entertainment. The
experience of viewing a movie in a
theatre is an inherently different
experience from live entertainment (e.g.,
a stage production or attending a
sporting event) or viewing a movie in
the home (e.g., through streaming video,
on a DVD, or via pay-per-view).
Reflecting the significant differences
of viewing a movie in a theatre, ticket
prices for movies generally differ from
prices for other forms of entertainment.
For example, typically, tickets for live
entertainment are significantly more
expensive than a movie ticket, whereas
the costs of home viewing through
streaming video, a DVD rental, or payper-view is usually significantly less
expensive than viewing a movie in a
theatre.
Viewing a movie at home differs from
viewing a movie in a theatre in many
ways. For example, the size of the
screens and sophistication of the sound
systems differ, and, unlike at home, in
the theatre, one has the social
experience of viewing a movie with
other patrons.
In addition, the most popular newly
released or ‘‘first-run’’ movies are not
available for home viewing at the time
they are released in theatres. Movies are
considered to be in their ‘‘first-run’’
during the four to five weeks following
initial release in a given locality. If
successful, a movie may be exhibited at
other theatres after the first-run as part
of a second or subsequent run (often
called a ‘‘sub-run’’ or ‘‘second-run’’).
Moviegoers generally do not regard
sub-run movies as an adequate
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substitute for first-run movies.
Reflecting the significant difference
between viewing a newly released, firstrun movie and an older sub-run movie,
tickets at theatres exhibiting first-run
movies usually cost significantly more
than tickets at sub-run theatres.
Art movies and foreign-language
movies are also not reasonable
substitutes for commercial, first-run
movies. Art movies, which include
documentaries, are sometimes referred
to as independent films. Although art
and foreign-language movies appeal to
some viewers of commercial movies, art
and foreign-language movies tend to
have more narrow appeal and typically
attract an older audience than
commercial movies. Exhibitors consider
the operation of theatres that
predominantly exhibit art and foreignlanguage movies to be distinct from the
operation of theatres that predominantly
exhibit commercial movies.
For all of these reasons, the Complaint
alleges that a hypothetical monopolist
controlling the exhibition of all firstrun, commercial movies in a relevant
geographic market would profitably
impose at least a small but significant
and non-transitory increase (‘‘SSNIP’’)
in ticket prices. Thus, the exhibition of
first-run, commercial movies is a
relevant product market and line of
commerce under Section 7 of the
Clayton Act in which to assess the
competitive effects of this acquisition.
Moviegoers typically are not willing
to travel very far from their home to
attend a movie. As a result, geographic
markets for the exhibition of first-run,
commercial movies are relatively local.
As detailed in the Complaint, there are
15 Local Markets in which AMC and
Carmike compete today and each is a
relevant geographic market in a section
of the country for purposes of Section 7
of the Clayton Act.
2. Competitive Effects
Exhibitors compete to attract
moviegoers to their theatres over the
theatres of their rivals. They do that by
competing on price, knowing that if
they charge too much (or do not offer
sufficient discounted tickets for
matinees, seniors, students, or children)
moviegoers will begin to frequent their
rivals. Exhibitors also compete by
seeking to license the first-run movies
that are likely to attract the largest
numbers of moviegoers. In addition,
exhibitors compete over the quality of
the viewing experience by offering
moviegoers the most sophisticated
sound systems, largest screens, best
picture clarity, best seating (including
stadium, reserved, and recliner seating),
and the broadest variety and highest
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quality of snacks, food, and drinks at
´
concession stands or cafes in the lobby
or served to moviegoers at their seats.
AMC and Carmike currently compete
for moviegoers in the Local Markets. As
detailed in the Complaint, all 15 Local
Markets are highly concentrated, and
will experience significant additional
increases in concentration as a result of
the transaction. In each of the Local
Markets, the proposed acquisition
would give AMC control of a majority,
or all, of the first-run, commercial movie
theatres and between 48% and 100% of
the annual box office revenues. The
transaction will also eliminate
substantial head-to-head competition
between AMC and Carmike that has
provided consumers with lower prices
and a higher quality movie-going
experience.
3. Entry and Expansion
Sufficient, timely entry that would
deter or counteract the anticompetitive
effects in the Local Markets is unlikely.
Exhibitors are reluctant to locate new,
first-run, commercial theatres near
existing, first-run, commercial theatres
unless the population density,
demographics, or quality of existing
theatres makes new entry viable. Timely
entry of new, first-run, commercial
movie theatres in the areas in and
around the Local Markets would be
unlikely to defeat a price increase by the
merged firm.
C. The Competitive Effects of the
Transaction on the Preshow
Services and Cinema Advertising
Markets
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1. Relevant Markets
As alleged in the Complaint, both
preshow services sold to exhibitors and
cinema advertising sold to advertisers in
the United States are relevant markets
under Section 7 of the Clayton Act, 15
U.S.C. § 18.
Preshow services consist of the
packaging of advertisements and
content into a preshow delivered to
exhibitors, enabling them to earn
revenue from the use of their screens
before the feature film. The price
charged to exhibitors for preshow
services is the portion of advertising
revenue retained by the network.
The sale of preshow services to
exhibitors constitutes a relevant product
market and line of commerce under
Section 7 of the Clayton Act. There are
no reasonable substitutes for preshow
services. Exhibitors cannot easily
replace the preshow services that they
buy from cinema advertising networks
because individual exhibitors generally
lack sufficient screens and geographic
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reach to secure national advertising. Nor
can exhibitors sufficiently replace
national advertising in preshows with
local and regional advertising because
local and regional advertising generates
far less revenue than national
advertising. Because there are no
reasonable substitutes for preshow
services, a hypothetical monopolist of
all such services could profitably
impose a SSNIP. Thus, the Complaint
alleges that the market for preshow
services is a relevant product market in
which to assess the competitive effects
of the acquisition.
Cinema advertising is the on-screen
advertising incorporated in the
preshow. The Complaint alleges that the
sale of cinema advertising to advertisers
is a relevant product market and line of
commerce under Section 7 of the
Clayton Act. Cinema advertising has
important attributes that differentiate it
from other forms of video advertising.
For example, the preshow is projected
on a large screen with high-quality
video and sound in a darkened
auditorium. In contrast to TV and other
video advertising platforms, the
audience cannot avoid the
advertisements by fast forwarding
through them, clicking past them, or
changing a channel. The preshow also
allows for long-form advertisements
typically not available on TV, and it
reaches a weekend audience and light
TV viewers who are otherwise difficult
to reach.
NCM and Screenvision compete with
each other throughout the United States.
Exhibitors and advertisers in the United
States would not switch to cinema
advertising networks located outside of
the United States in the event of a
SSNIP in the United States.
Accordingly, the Complaint alleges that
United States is a relevant geographic
market and section of the country for
preshow services sold to exhibitors and
for cinema advertising sold to
advertisers within the meaning of
Section 7 of the Clayton Act.
2. Competitive Effects
As a significant owner of equity
interests in both NCM and Screenvision
post-merger, AMC would have an
incentive to reduce the head-to-head
competition between NCM and
Screenvision. AMC will likely use its
influence and governance rights in both
companies to ensure that NCM and
Screenvision compete less aggressively
to sign contracts with exhibitors and
advertisers at the expense of the other
network. AMC will also have the ability
to use its access to confidential,
nonpublic, and trade secret information
of NCM and Screenvision to reduce
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competition by passing that
competitively sensitive information
between the companies.
The lessening of competition between
NCM and Screenvision will likely result
in lower payments and/or lower quality
preshows for exhibitors. Additionally,
advertisers will no longer benefit from
the lower prices that have resulted from
the competition between NCM and
Screenvision. Advertisers do not have
choices other than these two networks
to reach a broad number of viewers of
their cinema advertising.
As further alleged in the Complaint,
the loss of an independent Carmike also
likely would weaken Screenvision’s
ability to remain a robust competitive
check on NCM, the only other
significant competitor in the preshow
services and cinema advertising
markets. In 2014, the United States filed
a civil antitrust lawsuit to block NCM’s
acquisition of Screenvision and preserve
the intense competition between the
companies. NCM and Screenvision
subsequently abandoned their merger in
early 2015. As was the case in 2014,
Carmike remains Screenvision’s largest
exhibitor, and Screenvision touts the
Carmike theatre network’s current,
broad scale when competing to execute
deals with advertisers and exhibitors.
The merger, however, will extend
AMC’s exclusive contract with NCM to
include any new theatres that Carmike
would have opened or acquired. This
shift from Screenvision to NCM will
likely weaken Screenvision’s ability to
compete because: (1) It will be unable to
rely on Carmike’s growth to increase its
network’s scale; and (2) the number of
independent theatre exhibitors
unencumbered by an exclusive preshow
agreement with NCM will shrink as
exhibitor consolidation continues. For
all of these reasons, the Complaint
alleges that the merger is likely to
substantially lessen competition in the
preshow services and cinema
advertising markets.
3. Entry and Expansion
According to the Complaint, the entry
barriers associated with developing a
cinema advertising network are high,
and thus new entry or expansion by
existing competitors is unlikely to
prevent or remedy the proposed
merger’s likely anticompetitive effects
in the preshow services and cinema
advertising markets. Barriers to entry
and expansion include the time and cost
of developing a network of screens to
achieve sufficient scale. NCM’s and
Screenvision’s lock-up of almost all of
the exhibitors in the United States
through staggered long-term contracts
makes entry a long process. This adds
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to the already high cost of building the
infrastructure necessary to develop and
attract national advertisers. It also
increases the length of time an entrant
must sustain losses before its scale is
large enough to sell advertising at longterm profitable rates.
Exhibitors generally cannot supply
preshow services themselves to replace
the substantial lessening of competition
in the preshow services market.
Individual exhibitors or groups of small
exhibitors whose contracts with NCM or
Screenvision are expiring are unlikely to
be able to establish cost-effective sales
forces, attract national advertisers, or
otherwise develop a sufficient
infrastructure to reasonably replace lost
competition.
III. EXPLANATION OF THE
PROPOSED FINAL JUDGMENT
The movie theatre divestiture
requirement of the proposed Final
Judgment will eliminate the
anticompetitive effects of AMC’s
acquisition of Carmike in each of the 15
Local Markets for the exhibition of firstrun, commercial movies by establishing
new, independent, and economicallyviable competitors. The other
requirements of the proposed Final
Judgment will eliminate the
anticompetitive effects of the
acquisition on the preshow services and
cinema advertising markets by requiring
AMC to divest most of its ownership
interest in NCM, relinquish its NCM
Board seats and all governance rights,
transfer 24 AMC theatres with a total of
384 screens to the Screenvision
network, and implement firewalls to
prevent the misuse of competitively
sensitive information.
A. Theatre Exhibition of First-Run,
Commercial Movies
Section IV.A of the proposed Final
Judgment requires Defendants within
sixty calendar days after the filing of the
Complaint, or five calendar days after
the Court’s entry of Final Judgment,
whichever is later, to divest as viable,
ongoing businesses the theatres
identified on the ‘‘Initial Theatre
Divestiture Assets’’ list in Appendix A
to the proposed Final Judgment to one
or more acquirers acceptable to the
United States in its sole discretion. This
will require Defendants to divest a
minimum of 15 theatres covering each
of the Local Markets.
The theatres must be divested in such
a way as to satisfy the United States that
they can and will be operated by the
purchaser as viable, ongoing businesses
that can compete effectively as first-run,
commercial theatres. To that end, the
proposed Final Judgment provides the
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acquirer(s) of the theatres with an
option to enter into a transitional
agreement with Defendants of up to 120
days in length, with the possibility of
one or more extensions not to exceed six
months in total, for the supply of any
goods, services, support, including
software service and support, and
reasonable use of the name AMC, the
name Carmike, and any registered
service marks of AMC or Carmike, for
use in operating those theatres during
the period of transition. The availability
of a transitional agreement will ensure
that the acquirer(s) of the theatres can
operate without interruption while longterm supply agreements are arranged
and the theatres rebranded.
In the event that Defendants do not
accomplish the theatre divestitures
within the periods prescribed in the
proposed Final Judgment, Section VI of
the proposed Final Judgment provides
that the Court will appoint a Divestiture
Trustee selected by the United States to
effectuate the theatre divestitures
required by the Final Judgment.
If Defendants are unable to effectuate
any of the divestitures due to their
inability to obtain the consent of the
landlord from whom a theatre is leased,
Section IV.K of the proposed Final
Judgment requires them to divest
alternative theatre assets that compete
effectively with the theatres for which
the landlord consent was not obtained.
This provision will ensure that any
failure by Defendants to obtain landlord
consent does not thwart the relief
obtained in the proposed Final
Judgment.
The theatre divestiture provisions of
the proposed Final Judgment will
eliminate the anticompetitive effects of
AMC’s acquisition of Carmike in the
exhibition of first-run, commercial
movies in the Local Markets.
In addition to the proposed Final
Judgment’s provisions, the Hold
Separate provides that, until the
divestitures take place, AMC and
Carmike must maintain the sales and
marketing of the theatres, and maintain
the theatres in operable condition at
current capacity configurations. In
addition, AMC and Carmike must not
transfer or reassign to other areas within
the company their employees with
primary responsibility for the operation
of the theatres, except for transfer bids
initiated by employees pursuant to
Defendants’ regular, established jobposting policies.
B. Preshow Services and Cinema
Advertising
The proposed Final Judgment will
remedy the anticompetitive effects of
the proposed transaction in the markets
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for preshow services and cinema
advertising in two principal ways.
First, the proposed Final Judgment
will significantly reduce AMC’s
incentive and ability to weaken head-tohead competition between NCM and
Screenvision following the merger. In
the absence of relief, AMC’s significant
equity holdings in both NCM and
Screenvision would give AMC the
incentive post-merger to use its
governance rights to soften each
company’s competitive actions towards
the other and use its access to each
company’s competitively sensitive
information to help the companies
coordinate their actions. The proposed
Final Judgment significantly reduces
AMC’s incentives to lessen competition
or favor NCM over Screenvision by
requiring AMC to sell down its NCM
equity holdings to a level of no more
than 4.99%. Pursuant to NCM’s
governing documents, AMC would lose
its right to seats on NCM’s board of
directors. Because the divestiture will
leave AMC with a relatively small stake
in NCM—both in terms of its proportion
of the whole and total value—it would
no longer earn significant profits from a
lessening of competition between NCM
and Screenvision. Moreover, the NCM
profits to be earned from any action
AMC were to take to lessen such
competition would largely accrue to its
theatre exhibitor rivals Regal and
Cinemark, an unappealing outcome to
AMC.
To further reduce AMC’s ability to
lessen head-to-head competition
between NCM and Screenvision,
Section X.A of the proposed Final
Judgment prohibits AMC from holding
NCM board seats or otherwise
exercising any governance rights in
NCM. In addition, Section X.B of the
proposed Final Judgment prohibits
AMC from, among other activities,
attending NCM board meetings,
receiving nonpublic information from
NCM, or proposing NCM make future
acquisitions. These provisions, along
with the loss of AMC’s rights to
participate in NCM’s business as a result
of the sell down of AMC’s equity
interest below 5%, will render AMC
unable to direct or influence NCM to
soften its competitive actions towards
Screenvision.
In order to further ensure that AMC
cannot use its position as an owner and
major customer of NCM and
Screenvision to obtain competitively
sensitive information that could be used
to facilitate improper coordination or
otherwise cause competitive harm,
Section XII of the proposed Final
Judgment requires AMC to institute
firewalls to prevent AMC from obtaining
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competitively sensitive information
from either NCM or Screenvision,
passing competitively sensitive
information between NCM and
Screenvision, or obtaining from NCM or
Screenvision competitively sensitive
information about any of NCM or
Screenvision’s other exhibitor
customers.
Second, the proposed Final Judgment
seeks to ensure that Screenvision will
remain a strong competitor to NCM in
the preshow services and cinema
advertising markets. As alleged in the
Complaint, Screenvision is NCM’s only
significant competitor in these markets,
and Carmike is Screenvision’s largest
theatre exhibitor. While Carmike’s
legacy theatres will remain in
Screenvision’s network for the
remainder of the Carmike/Screenvision
contract, the merger will deprive
Screenvision of Carmike’s expected
growth through future acquisitions and
new theatre builds. To offset this loss of
future Carmike growth, Section XI.A of
the proposed Final Judgment requires
the Defendants to transfer the 24
theatres identified in Appendix B to the
proposed Final Judgment, comprising a
total of 384 screens, to Screenvision for
the term of the Final Judgment and to
stop utilizing NCM preshow and theatre
advertising services at these theatres. If
the Defendants fail to effectuate the
Screenvision transfer at any of the 24
theatres within the time period set forth
in Section XI.A, Section XI.B requires
AMC to divest such theatres pursuant to
the procedures set forth in Section IV.B
of the proposed Final Judgment. In
addition to the screen transfer,
Screenvision will also benefit from
AMC’s plans to remodel a significant
number of Carmike theatres, which will
likely increase audience attendance at
those theatres. Taken together,
Screenvision will obtain through the
screen transfers and theatre remodeling
the credibility and additional scale—
both in terms of geographic coverage
and increased audiences—to compete
effectively for advertisers and exhibitors
against NCM.
In addition, the proposed Final
Judgment requires AMC to designate a
Compliance Officer who will supervise
the AMC’s compliance with the Final
Judgment, distributing the Final
Judgment to the company’s personnel,
and reporting decree violations,
including violations of the firewall
provisions, to the United States.
IV. REMEDIES AVAILABLE TO
POTENTIAL PRIVATE LITIGANTS
Section 4 of the Clayton Act, 15
U.S.C. 15, provides that any person who
has been injured as a result of conduct
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prohibited by the antitrust laws may
bring suit in federal court to recover
three times the damages the person has
suffered, as well as costs and reasonable
attorneys’ fees. Entry of the proposed
Final Judgment will neither impair nor
assist the bringing of any private
antitrust damage action. Under the
provisions of Section 5(a) of the Clayton
Act, 15 U.S.C. 16(a), the proposed Final
Judgment has no prima facie effect in
any subsequent private lawsuit that may
be brought against Defendants.
V. PROCEDURES AVAILABLE FOR
MODIFICATION OF THE PROPOSED
FINAL JUDGMENT
The United States and Defendants
have stipulated that the proposed Final
Judgment may be entered by the Court
after compliance with the provisions of
the APPA, provided that the United
States has not withdrawn its consent.
The APPA conditions entry upon the
Court’s determination that the proposed
Final Judgment is in the public interest.
The APPA provides a period of at
least sixty (60) days preceding the
effective date of the proposed Final
Judgment within which any person may
submit to the United States written
comments regarding the proposed Final
Judgment. Any person who wishes to
comment should do so within sixty (60)
days of the date of publication of this
Competitive Impact Statement in the
Federal Register, or the last date of
publication in a newspaper of the
summary of this Competitive Impact
Statement, whichever is later. All
comments received during this period
will be considered by the United States
Department of Justice, which remains
free to withdraw its consent to the
proposed Final Judgment at any time
prior to the Court’s entry of judgment.
The comments and the response of the
United States will be filed with the
Court. In addition, comments will be
posted on the U.S. Department of
Justice, Antitrust Division’s internet
website and, under certain
circumstances, published in the Federal
Register.
Written comments should be
submitted to: Owen M. Kendler, Acting
Chief, Litigation III, Antitrust Division,
United States Department of Justice, 450
5th Street NW., Suite 4000, Washington,
DC 20530.
The proposed Final Judgment
provides that the Court retains
jurisdiction over this action, and the
parties may apply to the Court for any
order necessary or appropriate for the
modification, interpretation, or
enforcement of the Final Judgment.
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VI. ALTERNATIVES TO THE
PROPOSED FINAL JUDGMENT
The United States considered, as an
alternative to the proposed Final
Judgment, a full trial on the merits
against Defendants. Plaintiff could have
continued the litigation and sought
preliminary and permanent injunctions
against AMC’s acquisition of Carmike.
Plaintiff is satisfied, however, that the
divestiture of assets and other relief
described in the proposed Final
Judgment will preserve competition for
the exhibition of first-run, commercial
movies in the Local Markets, as well as
preserve competition in preshow
services and cinema advertising. Thus,
the proposed Final Judgment would
achieve all or substantially all of the
relief that the United States would have
obtained through litigation, but avoids
the time, expense, and uncertainty of a
full trial on the merits of the Complaint.
VII. STANDARD OF REVIEW UNDER
THE APPA FOR THE PROPOSED
FINAL JUDGMENT
The APPA requires that proposed
consent judgments in antitrust cases
brought by the United States be subject
to a sixty-day comment period, after
which the court shall determine
whether entry of the proposed Final
Judgment is ‘‘in the public interest.’’ 15
U.S.C. 16(e)(1). In making that
determination, the court, in accordance
with the statute as amended in 2004, is
required to consider:
(A) the competitive impact of such judgment,
including termination of alleged violations,
provisions for enforcement and modification,
duration of relief sought, anticipated effects
of alternative remedies actually considered,
whether its terms are ambiguous, and any
other competitive considerations bearing
upon the adequacy of such judgment that the
court deems necessary to a determination of
whether the consent judgment is in the
public interest; and
(B) the impact of entry of such judgment
upon competition in the relevant market or
markets, upon the public generally and
individuals alleging specific injury from the
violations set forth in the complaint
including consideration of the public benefit,
if any, to be derived from a determination of
the issues at trial.
Id. at § 16(e)(1)(A) & (B). In
considering these statutory factors, the
court’s inquiry is necessarily a limited
one as the government is entitled to
‘‘broad discretion to settle with the
defendant within the reaches of the
public interest.’’ United States v.
Microsoft Corp., 56 F.3d 1448, 1461
(D.C. Cir. 1995); see generally United
States v. SBC Commc’ns, Inc., 489 F.
Supp. 2d 1 (D.D.C. 2007) (assessing
public interest standard under the
Tunney Act); United States v. US
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Airways Group, Inc., 38 F. Supp. 3d 69,
75 (D.D.C. 2014) (noting that the court’s
‘‘inquiry is limited’’ because the
government has ‘‘broad discretion’’ to
determine the adequacy of the relief
secured through a settlement); United
States v. InBev N.V./S.A., No. 08–1965
(JR), 2009–2 Trade Cas. (CCH) ¶ 76,736,
2009 U.S. Dist. LEXIS 84787, at *3
(D.D.C. Aug. 11, 2009) (noting that the
court’s review of a consent judgment is
limited and only inquires ‘‘into whether
the government’s determination that the
proposed remedies will cure the
antitrust violations alleged in the
complaint was reasonable, and whether
the mechanism to enforce the final
judgment are clear and manageable.’’).2
As the United States Court of Appeals
for the District of Columbia Circuit has
held, a court conducting inquiry under
the APPA may consider, among other
things, the relationship between the
remedy secured and the specific
allegations set forth in the government’s
complaint, whether the decree is
sufficiently clear, whether enforcement
mechanisms are sufficient, and whether
the decree may positively harm third
parties. See Microsoft, 56 F.3d at 1458–
62. With respect to the adequacy of the
relief secured by the decree, a court may
not ‘‘engage in an unrestricted
evaluation of what relief would best
serve the public.’’ United States v. BNS,
Inc., 858 F.2d 456, 462 (9th Cir. 1988)
(quoting United States v. Bechtel Corp.,
648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460–62;
United States v. Alcoa, Inc., 152 F.
Supp. 2d 37, 40 (D.D.C. 2001); InBev,
2009 U.S. Dist. LEXIS 84787, at *3.
Courts have held that:
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[t]he balancing of competing social and
political interests affected by a proposed
antitrust consent decree must be left, in the
first instance, to the discretion of the
Attorney General. The court’s role in
protecting the public interest is one of
insuring that the government has not
breached its duty to the public in consenting
to the decree. The court is required to
determine not whether a particular decree is
the one that will best serve society, but
whether the settlement is ‘‘within the reaches
of the public interest.’’ More elaborate
requirements might undermine the
effectiveness of antitrust enforcement by
consent decree.
2 The 2004 amendments substituted ‘‘shall’’ for
‘‘may’’ in directing relevant factors for court to
consider and amended the list of factors to focus on
competitive considerations and to address
potentially ambiguous judgment terms. Compare 15
U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006);
see also SBC Commc’ns, 489 F. Supp. 2d at 11
(concluding that the 2004 amendments ‘‘effected
minimal changes’’ to Tunney Act review).
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Bechtel, 648 F.2d at 666 (emphasis
added) (citations omitted).3 In
determining whether a proposed
settlement is in the public interest, a
district court ‘‘must accord deference to
the government’s predictions about the
efficacy of its remedies, and may not
require that the remedies perfectly
match the alleged violations.’’ SBC
Commc’ns, 489 F. Supp. 2d at 17; see
also US Airways, 8 F. Supp. 3d at 75
(noting that a court should not reject the
proposed remedies because it believes
others are preferable); Microsoft, 56 F.3d
at 1461 (noting the need for courts to be
‘‘deferential to the government’s
predictions as to the effect of the
proposed remedies’’); United States v.
Archer-Daniels-Midland Co., 272 F.
Supp. 2d 1, 6 (D.D.C. 2003) (noting that
the court should grant due respect to the
government’s prediction as to the effect
of proposed remedies, its perception of
the market structure, and its views of
the nature of the case).
Courts have greater flexibility in
approving proposed consent decrees
than in crafting their own decrees
following a finding of liability in a
litigated matter. ‘‘[A] proposed decree
must be approved even if it falls short
of the remedy the court would impose
on its own, as long as it falls within the
range of acceptability or is ‘within the
reaches of public interest.’ ’’ United
States v. Am. Tel. & Tel. Co., 552 F.
Supp. 131, 151 (D.D.C. 1982) (citations
omitted) (quoting United States v.
Gillette Co., 406 F. Supp. 713, 716 (D.
Mass. 1975)), aff’d sub nom. Maryland
v. United States, 460 U.S. 1001 (1983);
see also US Airways, 38 F. Supp. 3d at
76 (noting that room must be made for
the government to grant concessions in
the negotiation process for settlements
(citing Microsoft, 56 F.3d at 1461));
United States v. Alcan Aluminum Ltd.,
605 F. Supp. 619, 622 (W.D. Ky. 1985)
(approving the consent decree even
though the court would have imposed a
greater remedy). To meet this standard,
the United States ‘‘need only provide a
factual basis for concluding that the
settlements are reasonably adequate
remedies for the alleged harms.’’ SBC
Commc’ns, 489 F. Supp. 2d at 17.
Moreover, the court’s role under the
APPA is limited to reviewing the
3 Cf. BNS, 858 F.2d at 464 (holding that the
court’s ‘‘ultimate authority under the [APPA] is
limited to approving or disapproving the consent
decree’’); United States v. Gillette Co., 406 F. Supp.
713, 716 (D. Mass. 1975) (noting that, in this way,
the court is constrained to ‘‘look at the overall
picture not hypercritically, nor with a microscope,
but with an artist’s reducing glass’’). See generally
Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the
remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall
outside of the ‘reaches of the public interest’ ’’).
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remedy in relationship to the violations
that the United States has alleged in its
Complaint and does not authorize the
court to ‘‘construct [its] own
hypothetical case and then evaluate the
decree against that case.’’ Microsoft, 56
F.3d at 1459; see also US Airways, 38
F. Supp 3d at 75 (noting that the court
must simply determine whether there is
a factual foundation for the
government’s decisions such that its
conclusions regarding the proposed
settlements are reasonable); InBev, 2009
U.S. Dist. LEXIS 84787, at *20
(concluding that ‘‘the ‘public interest’ is
not to be measured by comparing the
violations alleged in the complaint
against those the court believes could
have, or even should have, been
alleged’’). Because the ‘‘court’s authority
to review the decree depends entirely
on the government’s exercising its
prosecutorial discretion by bringing a
case in the first place,’’ it follows that
‘‘the court is only authorized to review
the decree itself,’’ and not to ‘‘effectively
redraft the complaint’’ to inquire into
other matters that the United States did
not pursue. Microsoft, 56 F.3d at 1459–
60. As this Court confirmed in SBC
Communications, courts ‘‘cannot look
beyond the complaint in making the
public interest determination unless the
complaint is drafted so narrowly as to
make a mockery of judicial power.’’ 489
F. Supp. 2d at 15.
In its 2004 amendments, Congress
made clear its intent to preserve the
practical benefits of utilizing consent
decrees in antitrust enforcement, adding
the unambiguous instruction that
‘‘[n]othing in this section shall be
construed to require the court to
conduct an evidentiary hearing or to
require the court to permit anyone to
intervene.’’ 15 U.S.C. 16(e)(2); see also
US Airways, 38 F. Supp. 3d at 76
(indicating that a court is not required
to hold an evidentiary hearing or to
permit intervenors as part of its review
under the Tunney Act). This language
codified what Congress intended when
it enacted the Tunney Act in 1974, as
the author of this legislation, Senator
Tunney explained: ‘‘The court is
nowhere compelled to go to trial or to
engage in extended proceedings which
might have the effect of vitiating the
benefits of prompt and less costly
settlement through the consent decree
process.’’ 119 Cong. Rec. 24,598 (1973)
(statement of Sen. Tunney). Rather, the
procedure for the public interest
determination is left to the discretion of
the court, with the recognition that the
court’s ‘‘scope of review remains
sharply proscribed by precedent and the
nature of Tunney Act proceedings.’’
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AND WHEREAS, the essence of this
Final Judgment is the prompt and
certain divestiture of certain rights or
assets by the Defendants to assure that
competition is not substantially
lessened;
AND WHEREAS, Plaintiff requires
VIII. DETERMINATIVE DOCUMENTS
Defendants to make certain divestitures,
There are no determinative materials
undertake certain actions, and refrain
or documents within the meaning of the from certain conduct for the purpose of
APPA that were considered by the
remedying the loss of competition
United States in formulating the
alleged in the Complaint;
proposed Final Judgment.
AND WHEREAS, Defendants have
represented to Plaintiff that the
Dated: December 20, 2016
divestitures required below can and will
Respectfully submitted,
/s/ lllllllllllllllllll be made and the actions and conduct
restrictions can and will be undertaken,
Gregg I. Malawer (D.C. Bar #481685),
and that Defendants will later raise no
U.S. Department of Justice, Antitrust
claim of hardship or difficulty as
Division, 450 5th Street NW., Suite 4000,
grounds for asking the Court to modify
Washington, DC 20530, Phone: Gregg
any of the divestiture and other remedy
Malawer (202) 616–5943, Phone: Miriam
Vishio (202) 598–8091, Fax: (202) 514–7308,
provisions contained below;
Email: gregg.malawer@usdoj.gov.
NOW THEREFORE, before any
Attorney for the United States.
testimony is taken, without trial or
adjudication of any issue of fact or law,
United States District Court for the
and upon consent of the parties, it is
District of Columbia
ORDERED, ADJUDGED AND DECREED:
SBC Commc’ns, 489 F. Supp. 2d at 11.4
A court can make its public interest
determination based on the competitive
impact statement and response to public
comments alone. US Airways, 38 F.
Supp. 3d at 76.
United States of America, Plaintiff, v. AMC
Entertainment Holdings, Inc., and Carmike
Cinemas, Inc., Defendants.
Case No.: 1:16–cv–02475
Judge: Randolph D. Moss
Filed: 12/20/2016
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[PROPOSED] FINAL JUDGMENT
WHEREAS, Plaintiff United States of
America filed its Complaint on
December 20, 2016 the United States
and Defendants, AMC Entertainment
Holdings, Inc. (‘‘AMC’’) and Carmike
Cinemas, Inc. (‘‘Carmike’’), by their
respective attorneys, have consented to
the entry of this Final Judgment without
trial or adjudication of any issue of fact
or law, and without this Final Judgment
constituting any evidence against or
admission by any party regarding any
issue of fact or law;
AND WHEREAS, Defendants agree to
be bound by the provisions of this Final
Judgment pending its approval by the
Court;
4 See also United States v. Enova Corp., 107 F.
Supp. 2d 10, 17 (D.D.C. 2000) (noting that the
‘‘Tunney Act expressly allows the court to make its
public interest determination on the basis of the
competitive impact statement and response to
comments alone’’); United States v. Mid-Am.
Dairymen, Inc., No. 73–CV–681–W–1, 1977–1 Trade
Cas. (CCH) ¶ 61,508, at 71,980, *22 (W.D. Mo. 1977)
(‘‘Absent a showing of corrupt failure of the
government to discharge its duty, the Court, in
making its public interest finding, should . . .
carefully consider the explanations of the
government in the competitive impact statement
and its responses to comments in order to
determine whether those explanations are
reasonable under the circumstances.’’); S. Rep. No.
93–298, at 6 (1973) (‘‘Where the public interest can
be meaningfully evaluated simply on the basis of
briefs and oral arguments, that is the approach that
should be utilized.’’).
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I. JURISDICTION
This Court has jurisdiction over the
subject matter of and each of the parties
to this action. The Complaint states a
claim upon which relief may be granted
against Defendants under Section 7 of
the Clayton Act, as amended, 15 U.S.C.
§ 18.
II. DEFINITIONS
As used in this Final Judgment:
A. ‘‘Acquirer’’ or ‘‘Acquirers’’ means
the entity or entities to which
Defendants divest the Theatre
Divestiture Assets.
B. ‘‘AMC’’ means AMC Entertainment
Holdings, Inc., a Delaware corporation
with its headquarters in Leawood,
Kansas, its successors and assigns, and
its subsidiaries, divisions, groups,
affiliates, partnerships and joint
ventures, and their directors, officers,
managers, agents, and employees.
C. ‘‘Carmike’’ means Carmike
Cinemas, Inc., a Delaware corporation
with its headquarters in Columbus,
Georgia, its successors and assigns, and
its subsidiaries, divisions, groups,
affiliates, partnerships and joint
ventures, and their directors, officers,
managers, agents, and employees.
D. ‘‘NCM Divestiture Assets’’ means
that portion of Defendants’ NCM
Holdings required to be divested under
this Final Judgment.
E. ‘‘Initial Theatre Divestiture Assets’’
means the theatre assets listed in
Appendix A. The term ‘‘Initial Theatre
Divestiture Assets’’ includes:
1. All tangible assets that comprise
the business of operating theatres that
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exhibit movies, including, but not
limited to, real property and
improvements, research and
development activities, all equipment,
fixed assets, and fixtures, personal
property, inventory, office furniture,
materials, supplies, and other tangible
property and all assets used in
connection with the Initial Theatre
Divestiture Assets; all licenses, permits,
and authorizations issued by any
governmental organization relating to
the Initial Theatre Divestiture Assets; all
contracts (including management
contracts), teaming arrangements,
agreements, leases, commitments,
certifications, and understandings
relating to the Initial Theatre Divestiture
Assets, including supply agreements
(provided however, that supply
agreements that apply to all of each
Defendant’s theatres may be excluded
from the Initial Theatre Divestiture
Assets, subject to the transitional
agreement provisions specified in
Section IV(F)); all customer lists
(including rewards and loyalty club data
at the option of the Acquirer(s), copies
of which may be retained by Defendants
at their option), contracts, accounts, and
credit records relating to the Initial
Theatre Divestiture Assets; all repair
and performance records and all other
records relating to the Initial Theatre
Divestiture Assets; and
2. All intangible assets relating to the
operation of the Initial Theatre
Divestiture Assets, including, but not
limited, to all patents, licenses and
sublicenses, intellectual property,
copyrights, trademarks, trade names,
service marks, service names, (provided,
however, that the names Carmike, AMC,
and any registered service marks of
Carmike or AMC may be excluded from
the Initial Theatre Divestiture Assets,
subject to the transitional agreement
provisions specified in Section IV(F)),
technical information, computer
software and related documentation
(provided, however, that Defendants’
proprietary software may be excluded
from the Initial Theatre Divestiture
Assets, subject to the transitional
agreement provisions specified in
Section IV(F)), know-how and trade
secrets, drawings, blueprints, designs,
design protocols, specifications for
materials, specifications for parts and
devices, safety procedures for the
handling of materials and substances,
all research data concerning historic and
current research and development,
quality assurance and control
procedures, design tools and simulation
capability, all manuals and technical
information Carmike or AMC provide to
their own employees, customers,
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suppliers, agents, or licensees (except
for the employee manuals that Carmike
or AMC provide to all its employees),
and all research data concerning historic
and current research and development.
F. ‘‘Screen Transfer Theatres’’ means
the theatres listed in Appendix B.
G. ‘‘Screen Transfer Divestiture
Assets’’ means any Screen Transfer
Theatres that Defendants must divest
pursuant to Section XI(B) of this Final
Judgment due to Defendants’ failure to
fully effect the screen transfers required
by Section XI(A). The term ‘‘Screen
Transfer Divestiture Assets’’ also
includes for any such Screen Transfer
Theatre:
1. All tangible assets that comprise
the business of operating theatres that
exhibit movies, including, but not
limited to, real property and
improvements, research and
development activities, all equipment,
fixed assets, and fixtures, personal
property, inventory, office furniture,
materials, supplies, and other tangible
property and all assets used in
connection with the Screen Transfer
Divestiture Assets; all licenses, permits,
and authorizations issued by any
governmental organization relating to
the Screen Transfer Divestiture Assets;
all contracts (including management
contracts), teaming arrangements,
agreements, leases, commitments,
certifications, and understandings
relating to the Screen Transfer
Divestiture Assets, including supply
agreements (provided, however, that
supply agreements that apply to all of
each Defendant’s theatres may be
excluded from the Screen Transfer
Divestiture Assets, subject to the
transitional agreement provisions
specified in Section IV(F)); all customer
lists (including rewards and loyalty club
data at the option of the Acquirer(s),
copies of which may be retained by
Defendants at their option), contracts,
accounts, and credit records relating to
the Screen Transfer Divestiture Assets;
all repair and performance records and
all other records relating to the Screen
Transfer Divestiture Assets; and
2. All intangible assets relating to the
operation of the Screen Transfer
Divestiture Assets, including, but not
limited to, all patents, licenses and
sublicenses, intellectual property,
copyrights, trademarks, trade names,
service marks, service names, (provided,
however, that the names Carmike and
AMC, and any registered service marks
of Carmike and AMC may be excluded
from the Screen Transfer Divestiture
Assets, subject to the transitional
agreement provisions specified in
Section IV(F)), technical information,
computer software and related
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documentation (provided, however, that
Defendants’ proprietary software may be
excluded from the Screen Transfer
Divestiture Assets, subject to the
transitional agreement provisions
specified in Section IV(F)), know-how
and trade secrets, drawings, blueprints,
designs, design protocols, specifications
for materials, specifications for parts
and devices, safety procedures for the
handling of materials and substances,
all research data concerning historic and
current research and development,
quality assurance and control
procedures, design tools and simulation
capability, all manuals and technical
information Carmike or AMC provide to
their own employees, customers,
suppliers, agents, or licensees (except
for the employee manuals that Carmike
or AMC provide to all its employees),
and all research data concerning historic
and current research and development.
H. ‘‘Theatre Divestiture Assets’’
means the Initial Theatre Divestiture
Assets and the Screen Transfer
Divestiture Assets.
I. ‘‘Landlord Consent’’ means any
contractual approval or consent that the
landlord or owner of one or more of the
Theatre Divestiture Assets, or of the
property on which one or more of the
Theatre Divestiture Assets is situated,
must grant prior to the transfer of one
of the Theatre Divestiture Assets to an
Acquirer.
J. ‘‘NCM’’ means National CineMedia,
LLC, a Delaware limited liability
company together with National
CineMedia, Inc., headquartered in
Centennial, Colorado, its successors and
assigns, and its subsidiaries, divisions,
groups, affiliates, partnerships and joint
ventures, and their directors, officers,
managers, agents, and employees.
K. ‘‘NCM Holdings’’ means any equity
interest of NCM that AMC owns or
controls, directly or indirectly, of NCM,
whether voting or nonvoting.
L. ‘‘Competitively Sensitive
Information’’ means all non-public
information, provided, disclosed, or
otherwise made available to the
Defendants by NCM or Screenvision,
including but not limited to,
information related to: (i) Current or
future business plans; (ii) technological
tests or initiatives; (iii) investments,
finances or budgets; (iv) pricing; (v)
information related to other movie
theatre exhibitors; (vi) terms and
conditions (including but not limited to
fees or prices) of any actual or
prospective contract, agreement,
understanding, or relationship
concerning the exhibition of first-run
commercial movies or preshow and
cinema advertising services, to specific
or identifiable customers or classes of
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groups of customers; or (vii) the
existence of any such prospective
contract, agreement, understanding, or
relationship, as well as any proprietary
customer information.
M. ‘‘Person’’ means any natural
person, corporation, association, firm,
partnership, or other business or legal
entity.
N. ‘‘Screenvision’’ means, SV Holdco,
LLC, a Delaware limited liability
company, headquartered in New York,
New York, and the subsidiary it owns
and operates, Screenvision Exhibition,
Inc., its successors and assigns, and its
subsidiaries, divisions, groups,
affiliates, partnerships and joint
ventures, and their directors, officers,
managers, agents, and employees.
III. APPLICABILITY
A. This Final Judgment applies to
AMC and Carmike, as defined above,
and all other persons in active concert
or participation with any of them who
receive actual notice of this Final
Judgment by personal service or
otherwise.
B. If, prior to complying with Sections
IV, VI, VII or XI of this Final Judgment,
Defendants sell or otherwise dispose of
all or substantially all of their assets or
of lesser business units that include the
Theatre Divestiture Assets or NCM
Divestiture Assets, they shall require the
purchaser to be bound by the provisions
of this Final Judgment. Defendants need
not obtain such an agreement from the
Acquirer(s) of the assets divested
pursuant to this Final Judgment.
IV. DIVESTITURES OF THEATRES
A. Defendants are ordered and
directed, within sixty (60) calendar days
after the filing of the Complaint in this
matter, or five (5) calendar days after
notice of entry of this Final Judgment by
the Court, whichever is later, to divest
the Initial Theatre Divestiture Assets in
a manner consistent with this Final
Judgment to one or more Acquirer(s)
acceptable to the United States in its
sole discretion. The United States, in its
sole discretion, may agree to one or
more extensions of this time period, not
to exceed sixty (60) calendar days in
total, and shall notify the Court in such
circumstances. Defendants agree to use
their best efforts to divest the Initial
Theatre Divestiture Assets as
expeditiously as possible.
B. If Defendants fail to accomplish the
screen transfer required by Section
XI(A) below for any Screen Transfer
Theatre, Defendants are ordered and
directed, within sixty (60) calendar days
after the expiration of the transfer
period provided for in Section XI(A),
and any extensions to that period
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granted by the United States, to divest
the Screen Transfer Divestiture Assets
in a manner consistent with this Final
Judgment to one or more Acquirer(s)
acceptable to the United States in its
sole discretion. The United States, in its
sole discretion, may agree to one or
more extensions of this time period, not
to exceed ninety (90) calendar days in
total, and shall notify the Court in such
circumstances. Defendants agree to use
their best efforts to divest the Screen
Transfer Divestiture Assets as
expeditiously as possible. Defendants
shall not divest the Screen Transfer
Divestiture Assets to any Acquirer that
contracts with NCM to provide preshow and cinema advertising services.
Such Screen Transfer Theatres must be
divested free and clear of any contracts
with NCM to provide pre-show and
cinema advertising services.
C. In accomplishing the divestitures
ordered by this Final Judgment,
Defendants promptly shall make known,
by usual and customary means, the
availability of the Theatre Divestiture
Assets. Defendants shall inform any
person making an inquiry regarding a
possible purchase of the Theatre
Divestiture Assets that they are being
divested pursuant to this Final
Judgment and provide that person with
a copy of this Final Judgment.
Defendants shall offer to furnish to all
prospective Acquirers, subject to
customary confidentiality assurances,
all information and documents relating
to the Theatre Divestiture Assets
customarily provided in a due diligence
process except such information or
documents subject to the attorney-client
privilege or work-product doctrine.
Defendants shall make available such
information to the United States at the
same time that such information is
made available to any other person.
D. Defendants shall provide the
Acquirer(s) and the United States
information relating to the personnel
involved in the operation and
management of the applicable Theatre
Divestiture Assets to enable the
Acquirer(s) to make offers of
employment. Defendants shall not
interfere with any negotiations by the
Acquirer(s) to employ or contract with
any employee of any Defendant whose
primary responsibility relates to the
operation or management of the
applicable Theatre Divestiture Assets
being sold to the Acquirer(s).
E. Defendants shall permit
prospective Acquirer(s) of the Theatre
Divestiture Assets to have reasonable
access to personnel and to make
inspections of the physical facilities of
the Theatre Divestiture Assets; access to
any and all environmental, zoning, and
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other permit documents and
information; and access to any and all
financial, operational, or other
documents and information customarily
provided as part of a due diligence
process.
F. In connection with the divestiture
of the Theatre Divestiture Assets, at the
option of the Acquirer(s), Defendants
shall enter into a transitional supply,
service, support, and use agreement
(‘‘transitional agreement’’), of up to 120
days in length, for the supply of any
goods, services, support, including
software service and support, and
reasonable use of the names AMC and
Carmike, and any registered service
marks of AMC or Carmike, that the
Acquirer(s) request for the operation of
the Theatre Divestiture Assets, during
the period covered by the transitional
agreement. At the request of the
Acquirer(s), the United States in its sole
discretion may agree to one or more
extensions of this time period not to
exceed six (6) months in total. The
terms and conditions of the transitional
agreement must be acceptable to the
United States in its sole discretion. The
transitional agreement shall be deemed
incorporated into this Final Judgment
and a failure by Defendants to comply
with any of the terms or conditions of
the transitional agreement shall
constitute a failure to comply with this
Final Judgment.
G. Defendants shall warrant to the
Acquirer(s) of the Theatre Divestiture
Assets that each asset will be
operational on the date of sale.
H. Defendants shall not take any
action that will impede in any way the
permitting, operation, or divestiture of
the Theatre Divestiture Assets.
I. Defendants shall warrant to the
Acquirer(s) that there are no material
defects in the environmental, zoning, or
other permits pertaining to the
operation of the Theatre Divestiture
Assets. Following the sale of the Theatre
Divestiture Assets, Defendants will not
undertake, directly or indirectly, any
challenges to the environmental, zoning,
or other permits relating to the
operation of the Theatre Divestiture
Assets.
J. Unless the United States otherwise
consents in writing, the divestitures
made pursuant to Section IV(A) and
IV(B), or by a Divestiture Trustee
appointed pursuant to Section VI of this
Final Judgment, shall include the entire
Theatre Divestiture Assets, and shall be
accomplished in such a way as to satisfy
the United States, in its sole discretion
that the Theatre Divestiture Assets can
and will be used by the Acquirer(s) as
part of a viable, ongoing business of
operating theatres that exhibit primarily
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first-run, commercial movies.
Divestiture of the Theatre Divestiture
Assets may be made to one or more
Acquirers, provided that in each
instance it is demonstrated to the sole
satisfaction of the United States that the
Theatre Divestiture Assets will remain
viable and the divestiture of such assets
will remedy the competitive harm
alleged in the Complaint. The
divestitures, whether pursuant to
Section IV (A), IV (B), or VI of this Final
Judgment,
(1) shall be made to Acquirers that, in the
United States’ sole judgment have the intent
and capability (including the necessary
managerial, operational, technical, and
financial capability) of competing effectively
in the business of theatres exhibiting
primarily first-run, commercial movies; and
(2) shall be accomplished so as to satisfy
the United States, in its sole discretion, that
none of the terms of any agreement between
Acquirers and Defendants gives Defendants
the ability unreasonably to raise the
Acquirers’ costs, to lower the Acquirers’
efficiency, or otherwise to interfere in the
ability of any Acquirer to compete
effectively.
K. If Defendants are unable to effect
any of the divestitures required herein
due to the inability to obtain the
Landlord Consent for any of the Theatre
Divestiture Assets, Defendants shall
divest alternative theatre assets that
compete effectively with the theatre or
theatres for which the Landlord Consent
was not obtained. The United States
shall, in its sole discretion, determine
whether such theatre assets compete
effectively with the theatres for which
Landlord Consent was not obtained.
L. Within five (5) business days
following a determination that Landlord
Consent cannot be obtained for any of
the Theatre Divestiture Assets,
Defendants shall notify the United
States, and Defendants shall propose an
alternative divestiture pursuant to
Section IV(K). The United States shall
have then ten (10) business days in
which to determine whether such
theatre assets are a suitable alternative
pursuant to Section IV(K). If Defendants’
selection is deemed not to be a suitable
alternative, the United States shall in its
sole discretion select alternative theatre
assets to be divested from among those
theatre(s) that the United States has
determined, in its sole discretion,
compete effectively with the theatre(s)
for which Landlord Consent was not
obtained.
M. If a Divestiture Trustee is
responsible for effecting divestiture of
the Theatre Divestiture Assets, it shall
notify the United States and Defendants
within five (5) business days following
a determination that Landlord Consent
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cannot be obtained for one or more of
the Theatre Divestiture Assets.
Defendants shall thereafter have five (5)
business days to propose an alternative
divestiture pursuant to Section IV(K).
The United States shall then have ten
(10) business days to determine whether
the proposed theatre assets are a
suitable competitive alternative
pursuant to Section IV(K). If Defendants’
selection is deemed not to be a suitable
competitive alternative, the United
States shall in its sole discretion select
alternative theatre assets to be divested
from among those theatre(s) that the
United States has determined, in its sole
discretion, compete effectively with the
theatre(s) for which Landlord Consent
was not obtained.
V. NOTICE OF PROPOSED THEATRE
DIVESTITURES
A. Within two (2) business days
following execution of a definitive
divestiture agreement, Defendants or the
Divestiture Trustee, whoever is then
responsible for effecting the divestitures
required herein, shall notify the United
States of any proposed divestitures
required by Sections IV(A), IV(B), and
VI of this Final Judgment. If the
Divestiture Trustee is responsible, it
shall similarly notify Defendants. The
notice shall set forth the details of the
proposed divestitures and list the name,
address, and telephone number of each
person not previously identified who
offered or expressed an interest in or
desire to acquire any ownership interest
in the Theatre Divestiture Assets,
together with full details of the same.
B. Within fifteen (15) calendar days of
receipt by the United States of such
notice, the United States, in its sole
discretion, may request from
Defendants, the proposed Acquirer(s),
any other third party, or the Divestiture
Trustee, if applicable, additional
information concerning the proposed
divestitures, the proposed Acquirer(s),
and any other potential Acquirer(s).
Defendants and the Divestiture Trustee
shall furnish any additional information
requested to the United States within
fifteen (15) calendar days of receipt of
the request, unless the parties otherwise
agree.
C. Within thirty (30) calendar days
after receipt of the notice or within
twenty (20) calendar days after the
United States has been provided the
additional information requested from
Defendants, the proposed Acquirer(s),
any third party, and the Divestiture
Trustee, whichever is later, the United
States shall provide written notice to
Defendants, and the Divestiture Trustee,
if there is one, stating whether it objects
to the proposed divestitures. If the
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United States provides written notice
that it does not object, the divestitures
may be consummated, subject only to
the Defendants’ limited right to object to
the sale under Section VI(C) of this
Final Judgment. Absent written notice
that the United States does not object to
the proposed Acquirer(s) or upon
objection by the United States, a
divestiture proposed under Section
IV(A), IV(B), or VI shall not be
consummated. Upon objection by
Defendants under Section VI(C), a
divestiture proposed under Section VI
shall not be consummated unless
approved by the Court.
VI. APPOINTMENT OF TRUSTEE FOR
THEATRE DIVESTITURES
A. If Defendants have not divested the
Theatre Divestiture Assets within the
time period specified in Section IV(A)
and IV(B), respectively, Defendants
shall notify the United States of that fact
in writing, specifically identifying the
Theatre Divestiture Assets that have not
been divested. Upon application of the
United States, the Court shall appoint a
Divestiture Trustee selected by the
United States and approved by the
Court to effect the divestiture of the
applicable Theatre Divestiture Assets.
B. After the appointment of a
Divestiture Trustee becomes effective,
only the Divestiture Trustee shall have
the right to sell the applicable Theatre
Divestiture Assets. The Divestiture
Trustee shall have the power and
authority to accomplish the divestitures
to Acquirer(s) acceptable to the United
States at such price and on such terms
as are then obtainable upon reasonable
effort by the Divestiture Trustee, subject
to the provisions of Sections IV, V, VI
VIII, IX, and XIV, of this Final
Judgment, and shall have such other
powers as this Court deems appropriate.
Subject to Section VI (D) of this Final
Judgment, the Divestiture Trustee may
hire at the cost and expense of
Defendants any investment bankers,
attorneys, or other agents, who shall be
solely accountable to the Divestiture
Trustee and reasonably necessary in the
Divestiture Trustee’s judgment to assist
in the divestiture(s). Any such
investment bankers, attorneys, or other
agents shall serve on such terms and
conditions as the United States
approves, including confidentiality
requirements and conflict of interest
certifications.
C. Defendants shall not object to a sale
by the Divestiture Trustee on any
ground other than the Divestiture
Trustee’s malfeasance. Any such
objections by Defendants must be
conveyed in writing to the United States
and the Divestiture Trustee within ten
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(10) calendar days after the Divestiture
Trustee has provided the notice
required under Section V.
D. The Divestiture Trustee shall serve
at the cost and expense of Defendants
pursuant to a written agreement, on
such terms and conditions as the United
States approves, including
confidentiality requirements and
conflict of interest certifications. The
Divestiture Trustee shall account for all
monies derived from the sale of the
applicable Theatre Divestiture Assets,
and all costs and expenses so incurred.
After approval by the Court of the
Divestiture Trustee’s accounting,
including fees for its services yet unpaid
and those of any professionals and
agents retained by the Divestiture
Trustee, all remaining money shall be
paid to Defendants and the trust shall
then be terminated. The compensation
of the Divestiture Trustee and any
professionals and agents retained by the
Divestiture Trustee shall be reasonable
in light of the value of the Theatre
Divestiture Assets subject to sale by the
Divestiture Trustee and based on a fee
arrangement providing the Divestiture
Trustee with an incentive based on the
price and terms of the divestitures and
the speed with which they are
accomplished, but timeliness is
paramount. If the Divestiture Trustee
and Defendants are unable to reach
agreement on the Divestiture Trustee’s
or any agents’ or consultants’
compensation or other terms and
conditions of engagement within 14
calendar days of appointment of the
Divestiture Trustee, the United States
may, in its sole discretion, take
appropriate action, including making a
recommendation to the Court. The
Divestiture Trustee shall, within three
(3) business days of hiring any other
professionals or agents, provide written
notice of such hiring and the rate of
compensation to Defendants and the
United States.
E. Defendants shall use their best
efforts to assist the Divestiture Trustee
in accomplishing the required
divestitures. The Divestiture Trustee
and any consultants, accountants,
attorneys, and other persons retained by
the Divestiture Trustee shall have full
and complete access to the personnel,
books, records, and facilities of the
assets and business to be divested, and
Defendants shall develop financial and
other information relevant to such assets
and business as the Divestiture Trustee
may reasonably request, subject to
reasonable protection for trade secret or
other confidential research,
development, or commercial
information or any applicable
privileges. Defendants shall take no
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action to interfere with or to impede the
Divestiture Trustee’s accomplishment of
the divestitures.
F. After its appointment, the
Divestiture Trustee shall file monthly
reports with the parties and the Court
setting forth the Divestiture Trustee’s
efforts to accomplish the divestitures
ordered under this Final Judgment. To
the extent such reports contain
information that the Divestiture Trustee
deems confidential, such reports shall
not be filed in the public docket of the
Court. Such reports shall include the
name, address, and telephone number of
each person who, during the preceding
month, made an offer to acquire,
expressed an interest in acquiring,
entered into negotiations to acquire, or
was contacted or made an inquiry about
acquiring, any interest in the Theatre
Divestiture Assets, and shall describe in
detail each contact with any such
person. The Divestiture Trustee shall
maintain full records of all efforts made
to divest the Theatre Divestiture Assets.
G. If the Divestiture Trustee has not
accomplished the divestitures ordered
under this Final Judgment within six (6)
months after its appointment, the
Divestiture Trustee shall promptly file
with the Court a report setting forth (1)
the Divestiture Trustee’s efforts to
accomplish the required divestitures, (2)
the reasons, in the Divestiture Trustee’s
judgment, why the required divestitures
have not been accomplished, and (3) the
Divestiture Trustee’s recommendations.
To the extent such reports contain
information that the Divestiture Trustee
deems confidential, such reports shall
not be filed in the public docket of the
Court. The Divestiture Trustee shall at
the same time furnish such report to the
United States, which shall have the
right to make additional
recommendations consistent with the
purpose of the trust. The Court
thereafter shall enter such orders as it
shall deem appropriate to carry out the
purpose of the Final Judgment, which
may, if necessary, include extending the
trust and the term of the Divestiture
Trustee’s appointment by a period
requested by the United States.
H. If the United States determines that
the Divestiture Trustee has ceased to act
or failed to act diligently or in a
reasonably cost-effective manner, it may
recommend the Court appoint a
substitute Divestiture Trustee.
VII. DIVESTITURE OF NCM
HOLDINGS
A. Defendants are hereby ordered and
directed, in accordance with the terms
of this Final Judgment, on or before June
20, 2019, to divest that portion of the
NCM Holdings sufficient to cause
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Defendants to own no more than 4.99
percent of the outstanding shares of
NCM on a fully converted basis (the
‘‘NCM Divestiture Assets’’). Defendants
must divest the NCM Divestiture Assets
on the following schedule: (i) On or
before twelve (12) months from the date
of the filing of the Complaint in this
matter that portion of the NCM Holdings
sufficient to cause Defendants to own no
more than 15 percent of all outstanding
shares of NCM on a fully converted
basis, (ii) on or before twenty-four (24)
months from the date of the filing of the
Complaint in this matter that portion of
the NCM Holdings sufficient to cause
Defendants to own no more than 7.5
percent of all outstanding shares of
NCM on a fully converted basis; and (iii)
on or before June 20, 2019 that portion
of the NCM Holdings sufficient to cause
Defendants to own no more than 4.99
percent of all outstanding shares of
NCM on a fully converted basis. The
United States, in its sole discretion, may
agree to one or more extensions of this
time period, not to exceed sixty (60)
calendar days in total, and shall notify
the Court in such circumstances.
B. Defendants are enjoined and
restrained from the date of the filing of
the Complaint in this matter from
acquiring, directly or indirectly, any
additional NCM Holdings except to the
extent an NCM annual audience
attendance adjustment or an acquisition
of a movie theatre or movie theatre
chain results in Defendants’ NCM
Holdings exceeding the thresholds set
forth in Section VII (A). To the extent an
NCM annual audience attendance
adjustment or an acquisition of a movie
theatre or movie theatre chain results in
Defendants’ NCM Holdings’ exceeding
the thresholds set forth in Section VII
(A), then Defendants shall have 90 days
from the date their NCM Holdings
exceed the applicable threshold in
Section VII (A) to sell down their NCM
Holdings so that their NCM Holdings
comply with the applicable threshold.
The United States, in its sole discretion,
may agree to one or more extensions of
this time period, not to exceed 60
calendar days in total, and shall notify
the Court in such circumstances.
C. The divestitures required by
Section VII(A) may be made by open
market sale, public offering, private sale,
repurchase by NCM, or a combination
thereof. Such divestitures shall not be
made by private sale or placement to
any person who provides pre-show and
cinema advertising services other than
NCM unless the United States, in its
sole discretion, shall otherwise agree in
writing.
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96503
VIII. FINANCING
Defendants shall not finance all or
any part of any purchase made pursuant
to Sections IV or VII of this Final
Judgment.
IX. HOLD SEPARATE
Until the divestitures of the Theatre
Divestiture Assets required by this Final
Judgment have been accomplished,
Defendants shall take all steps necessary
to comply with the Hold Separate
Stipulation and Order entered by this
Court. Defendants shall take no action
that would jeopardize the divestitures
ordered by this Court.
X. NCM PROHIBITED CONDUCT
A. From the date of the filing of the
Complaint in this matter, Defendants are
enjoined and restrained, directly or
indirectly, from holding any governance
rights in NCM, including any seats on
NCM’s Board of Directors and from
exercising any voting rights in NCM.
B. From the date of the filing the
Complaint in this matter, Defendants are
enjoined and restrained, directly or
indirectly, from:
1. Suggesting, individually or as part of a
group, any candidate for election to NCM’s
Board of Directors, or having any officer,
director, manager, employee, or agent serve
as an officer, director, manager, employee, or
in a comparable position with or for NCM;
2. Using or attempting to use any
ownership interest in NCM to exert any
influence over NCM in the conduct of NCM’s
business, including but not limited to, NCM’s
strategies regarding the pricing of NCM’s
services;
3. Using or attempting to use any rights or
duties under any advertising agreement or
relationship between Defendants and NCM
(including any rights or duties Defendants
may have as a customer of NCM), to
influence NCM in the conduct of NCM’s
business with respect to any Person other
than AMC;
4. Participating in, being present at, or
receiving any notes, minutes, or agendas of,
information from, or any documents
distributed in connection with, any
nonpublic meeting of NCM’s Board of
Directors or any committee thereof, or any
other governing body of NCM. For purposes
of this provision, the term ‘‘meeting’’
includes any action taken by consent of the
relevant directors in lieu of a meeting;
5. Voting or permitting to be voted any
NCM shares that Defendants own unless the
United States, in its sole discretion,
otherwise consents in writing;
6. Communicating to or receiving from any
officer, director, manager, employee, or agent
of NCM any nonpublic information regarding
any aspect of Defendants’ or NCM’s business,
including any plans or proposals with
respect thereto; and
7. Proposing to any officer, director,
manager, employee, or agent of NCM that
NCM merge with, acquire, or sell itself to
another Person.
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C. Nothing in this Section, however,
is intended to prevent: (i) Defendants
from procuring preshow and cinema
advertising services from NCM,
including receiving necessary nonpublic information from NCM in the
context of the Defendants’ customer
relationship regarding the same, or to
prevent NCM from providing pre-show
and cinema advertising services to
Defendants, including providing
necessary non-public information to
Defendants in the context of NCM’s
vendor relationship regarding the same;
(ii) joint promotions between NCM and
Defendants and communications
regarding the provision or procurement
of pre-show and cinema advertising
services from NCM or Defendants,
respectively; (iii) Defendants from
hiring NCM personnel or NCM from
hiring Defendants personnel (provided
that such personnel are not
simultaneously employed or otherwise
affiliated with NCM or Defendants,
respectively); and (iv) nonpublic
communications regarding industrywide issues or possible potential
business transactions between the two
companies provided that such
communications do not violate the
antitrust laws or any other applicable
law or regulation.
XI. TRANSFER OF NCM–ALIGNED
THEATRE SCREENS
A. Defendants are hereby ordered and
directed, within sixty (60) calendar days
of the filing of the Complaint in this
matter, to (i) implement, use, and
continuously display Screenvision preshow services and cinema advertising at
the Screen Transfer Theatres for the
term of this Final Judgment; and (ii)
discontinue and permanently remove
NCM pre-show services and cinema
advertising at the Screen Transfer
Theatres for the term of this Final
Judgment. The United States, in its sole
discretion, may agree to one or more
extensions of this time period, not to
exceed sixty (60) days in total, and shall
notify the Court in such circumstances.
B. If Defendants do not effectuate the
implementation of Screenvision preshow services and cinema advertising at
any Screen Transfer Theatre and the
termination, if applicable, of any NCM
pre-show services and cinema
advertising at that Screen Transfer
Theatre during the time period set forth
in Section XI(A) (including any
extensions to that time period granted
pursuant to that Section), then
Defendants are ordered and directed to
divest that Screen Transfer Theatre
pursuant to the terms of Section IV(B)
of this Final Judgment. For the
avoidance of doubt, the Screen Transfer
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Theatres that Defendants must divest
pursuant to this paragraph are referred
to herein as the ‘‘Screen Transfer
Divestiture Assets.’’
XII. FIREWALLS
A. Defendants shall implement and
maintain reasonable procedures to
prevent (i) the sharing of Competitively
Sensitive Information between
Defendants and NCM except as
necessary to administer an exhibitor
services agreement or exhibition
agreement between NCM and
Defendants to supply preshow and
cinema advertising services; (ii) the
sharing of Competitively Sensitive
Information between Defendants and
Screenvision except as necessary to
administer an exhibitor services
agreement or exhibition agreement
between Screenvision and Defendants to
supply preshow and cinema advertising
services; (iii) the sharing of
Competitively Sensitive Information or
otherwise serving as a conduit to share
Competitively Sensitive Information
between NCM and Screenvision; and
(iv) Defendants from obtaining through
their ownership or governance position
at Screenvision or NCM any
Competitively Sensitive Information of
or about the business of any movie
theatre exhibitor other than Defendants.
B. Defendants shall, within thirty (30)
calendar days of the Court’s entry of the
Hold Separate Stipulation and Order,
submit to the United States a document
setting forth in detail the procedures
implemented to effect compliance with
this Section. The United States shall
notify Defendants within ten (10)
business days whether it approves of or
rejects Defendants’ compliance plan, in
its sole discretion.
C. In the event Defendants’
compliance plan is rejected, the reasons
for the rejection shall be provided to
Defendants and Defendants shall be
given the opportunity to submit, within
ten (10) business days of receiving the
notice of rejection, a revised compliance
plan. If the parties cannot agree on a
compliance plan, the United States shall
have the right to request that the Court
rule on whether Defendants’ proposed
compliance plan is reasonable.
D. Defendants may at any time submit
to the United States evidence relating to
the actual operation of any firewall in
support of a request to modify any
firewall set forth in this Section. In
determining whether it would be
appropriate for the United States to
consent to modify the firewall, the
United States, in its sole discretion,
shall consider the need to protect NCM,
Screenvision, or movie theatre exhibitor
Competitively Sensitive Information
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and the impact the firewall has had on
Defendants’ ability to efficiently support
the theatrical exhibition of movies.
XIII. COMPLIANCE PROGRAM
A. Defendants shall maintain a
compliance program that shall include
designating, within thirty (30) days of
the entry of this Final Judgment, a
Compliance Officer with responsibility
for achieving compliance with this Final
Judgment. The Compliance Officer
shall, on a continuing basis, supervise
the review of current and proposed
activities to ensure compliance with this
Final Judgment. The Compliance Officer
shall be responsible for accomplishing
the following activities:
(1) Distributing, within thirty (30) days of
the entry of this Final Judgment, a copy of
this Final Judgment to all of Defendants’
officers, directors, or any company employee
or manager with management responsibility
or oversight of theatrical exhibition and
preshowcinema advertising services;
(2) Distributing, within thirty (30) days of
succession, a copy of this Final Judgment to
any Person who succeeds to a position
described in Section XIII(A)(1); and
(3) Obtaining within sixty (60) days from
the entry of this Final Judgment, and once
within each calendar year after the year in
which this Final Judgment is entered, and
retaining for the term of this Final Judgment,
a written certification from each Person
designated in Sections XIII(A)(1) and
XIII(A)(2) that he or she: (a) Has received,
read, understands, and agrees to abide by the
terms of this Final Judgment; (b) understands
that failure to comply with this Final
Judgment may result in conviction for
criminal contempt of court; and (c) is not
aware of any violation of the Final Judgment.
Copies of such written certifications are to be
promptly provided to the U.S. Department of
Justice, Antitrust Division.
B. Within sixty (60) days of the entry
of this Final Judgment, Defendants shall
certify to the United States that they
have (1) designated a Compliance
Officer, specifying his or her name,
business address and telephone number;
and (2) distributed the Final Judgment
in accordance with Section XIII(A)(1).
C. If any of Defendants’ directors or
officers or the Compliance Officer learns
of any violation of this Final Judgment,
Defendants shall within ten (10)
business days provide to the U.S.
Department of Justice, Antitrust
Division a written detailed description
of the nature of the violation with the
names, titles, and company affiliation of
each person involved.
XIV. AFFIDAVITS
A. Within twenty (20) calendar days
of the filing of the Complaint in this
matter, and every thirty (30) calendar
days thereafter until the divestitures and
screen transfers have been completed
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under Sections IV(A), IV(B), VI, VII, and
XI. Defendants shall deliver to the
United States an affidavit as to the fact
and manner of its compliance with
Sections IV (A), IV (B), VI, VII, and XI
of this Final Judgment. Each such
affidavit pertaining to Sections IV (A),
IV (B), and VI shall include the name,
address, and telephone number of each
person who, during the preceding thirty
(30) calendar days, made an offer to
acquire, expressed an interest in
acquiring, entered into negotiations to
acquire, or was contacted or made an
inquiry about acquiring, any interest in
the Theatre Divestiture Assets, and shall
describe in detail each contact with any
such person during that period. Each
such affidavit pertaining to Sections
IV(A), IV(B), and VI shall also include
a description of the efforts Defendants
have taken to solicit buyers for and
complete the sale of the Theatre
Divestiture Assets, and to provide
required information to prospective
Acquirers, including the limitations, if
any, on such information. Each such
affidavit shall also describe the fact and
manner of Defendants’ compliance with
Section XI (A) and the arrangements
Defendants have made to complete the
required screen transfers in a timely
fashion. Assuming the information set
forth in the affidavit is true and
complete, any objection by the United
States to information provided by
Defendants, including limitations on
information, shall be made within
fourteen (14) calendar days of receipt of
each such affidavit.
B. Within twenty (20) calendar days
of the filing of the Complaint in this
matter, Defendants shall deliver to the
United States an affidavit that describes
in reasonable detail all actions taken
and all steps implemented on an
ongoing basis to comply with Section IX
of this Final Judgment. Defendants shall
deliver to the United States an affidavit
describing any changes to the efforts
and actions outlined in their earlier
affidavits filed pursuant to this section
within fifteen (15) calendar days after
the change is implemented.
C. Defendants shall notify the United
States no less than sixty (60) calendar
days prior to the expiration of each of
the deadlines for divesting the NCM
Divestiture Assets identified in Section
VII (A) of the arrangements Defendants
have made to complete such
divestitures in a timely fashion.
Defendants shall no later than five (5)
calendar days after each of the deadlines
identified in Section VII(A) deliver to
the United States an affidavit as to the
fact and manner of its compliance with
Section VII(A).
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D. For the term of this Final
Judgment, on or before each annual
anniversary of the date of the filing of
the Complaint in this matter,
Defendants shall file with the United
States a statement as to the fact and
manner of its compliance with the
provisions of Sections VII (B), X, and
XII, including a statement of the
percentage of all outstanding shares of
NCM owned by Defendants and a
description of any violations of Sections
VII (B), X, and XII.
E. Defendants shall keep all records of
all efforts made to preserve and divest
the Theatre Divestiture Assets and the
NCM Divestiture Assets until one year
after such divestitures have been
completed.
XV. COMPLIANCE INSPECTION
A. For the purposes of determining or
securing compliance with this Final
Judgment or of any related orders such
as the Hold Separate Stipulation and
Order, or of determining whether the
Final Judgment should be modified or
vacated, and subject to any legally
recognized privilege, from time to time
authorized representatives of the United
States Department of Justice, including
consultants and other persons retained
by the United States, shall, upon written
request of an authorized representative
of the Assistant Attorney General in
charge of the Antitrust Division, and on
reasonable notice to Defendants, be
permitted:
(1) access during Defendants’ office hours
to inspect and copy, or at the option of the
United States, to require Defendants to
provide hard copy or electronic copies of, all
books, ledgers, accounts, records, data, and
documents in the possession, custody, or
control of Defendants, relating to any matters
contained in this Final Judgment; and
(2) to interview, either informally or on the
record, Defendants’ officers, employees, or
agents, who may have their individual
counsel present, regarding such matters. The
interviews shall be subject to the reasonable
convenience of the interviewee and without
restraint or interference by Defendants.
B. Upon the written request of an
authorized representative of the
Assistant Attorney General in charge of
the Antitrust Division, Defendants shall
submit written reports or responses to
written interrogatories, under oath if
requested, relating to any of the matters
contained in this Final Judgment as may
be requested.
C. No information or documents
obtained by the means provided in this
section shall be divulged by the United
States to any person other than an
authorized representative of the
executive branch of the United States,
except in the course of legal proceedings
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96505
to which the United States is a party
(including grand jury proceedings), or
for the purpose of securing compliance
with this Final Judgment, or as
otherwise required by law.
D. If at the time information or
documents are furnished by Defendants
to the United States, Defendants
represent and identify in writing the
material in any such information or
documents to which a claim of
protection may be asserted under Rule
26(c)(1)(G) of the Federal Rules of Civil
Procedure, and Defendants mark each
pertinent page of such material,
‘‘Subject to claim of protection under
Rule 26(c)(1)(G) of the Federal Rules of
Civil Procedure,’’ then the United States
shall give Defendants ten (10) calendar
days notice prior to divulging such
material in any legal proceeding (other
than a grand jury proceeding).
XVI. NO REACQUISITION
Defendants may not reacquire any
part of the Theatre Divestiture Assets or
the NCM Divestiture Assets during the
term of this Final Judgment.
XVII. RETENTION OF JURISDICTION
This Court retains jurisdiction to
enable any party to this Final Judgment
to apply to this Court at any time for
further orders and directions as may be
necessary or appropriate to carry out or
construe this Final Judgment, to modify
any of its provisions, to enforce
compliance, and to punish violations of
its provisions.
XVIII. EXPIRATION OF FINAL
JUDGMENT
Unless this Court grants an extension,
this Final Judgment shall expire ten (10)
years from the date of its entry.
XIX. PUBLIC INTEREST
DETERMINATION
Entry of this Final Judgment is in the
public interest. The parties have
complied with the requirements of the
Antitrust Procedures and Penalties Act,
15 U.S.C. 16, including making copies
available to the public of this Final
Judgment, the Competitive Impact
Statement, and any comments thereon
and the United States’ responses to
comments. Based upon the record
before the Court, which includes the
Competitive Impact Statement and any
comments and response to comments
filed with the Court, entry of this Final
Judgment is in the public interest.
Date: lll, 201l
Court approval subject to procedures of
Antitrust Procedures and Penalties Act,
15 U.S.C. 16.
llllllllllllllllll
l
United States District Judge
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Federal Register / Vol. 81, No. 251 / Friday, December 30, 2016 / Notices
APPENDIX A
Theatre(s)
Address
1 ................
AMC Festival Plaza 16 OR Carmike Chantilly 13 Big D ..............
2 ................
AMC Destin Commons 14 OR Carmike Boulevard 10 Big D ......
3 ................
AMC Orange Park 24 OR Carmike Fleming Island 12 ................
4 ................
AMC Avenue Forsyth 12 OR Carmike Movies 400 12 ................
5 ................
AMC Stonecrest Mall 16 OR Carmike Conyers Crossroads 16 ..
6 ................
AMC Crestwood 18 OR Carmike Digiplex Lansing 8 ..................
7 ................
AMC Normal 14 OR Carmike Ovation Cinema 10 .......................
8 ................
(AMC Pekin 14) OR (Carmike Sunnyland 10 and Carmike
Grand Prairie 18).
9 ................
AMC Inver Grove OR Carmike Oakdale 20 .................................
10 ..............
(AMC Coon Rapids and AMC Arbor Lakes 16) OR (Carmike
Wynnsong 15).
11 ..............
AMC Rockaway 16 OR Carmike Digiplex Sparta 3 .....................
12 ..............
(AMC Mountainside 10) OR (Carmike Digiplex Rialto Westfield
6 and Carmike Digiplex Cranford 5).
13 ..............
AMC Lawton 12 OR Carmike Patriot 13 ......................................
14 ..............
(AMC Tilghman Square 8) OR (Carmike Promenade 16 + IMAX
and Carmike 16).
15 ..............
AMC Fitchburg 18 OR Sundance Carmike Madison ...................
7925 Vaughn Rd., Montgomery, AL 36116.
10477 Chantilly Pkwy, Montgomery, AL 36117.
Destin Commons, 4000 Legendary Dr., Destin, FL 32541.
465 Grand Blvd., Miramar Beach, FL 32550.
Orange Park Mall, 1910 Wells Rd., Orange Park, FL 32073.
1820 Town Center Blvd., Fleming Island, FL 32003.
The Collection at Forsyth, 350 Peachtree Pkwy, Cumming, GA
30041.
415 Atlanta Rd., Cumming, GA 30040.
Ashley Stewart, 8060 Mall Pkwy, Lithonia, GA 30038.
1536 Dogwood Dr. SE., Conyers, GA 30013.
13221 Rivercrest Dr., Crestwood, IL 60445.
16621 Torrence Ave., Lansing, IL 60438.
201 McKnight St., Normal, IL 61761.
415 Detroit Dr., Bloomington, IL 61704.
1124 Edgewater Dr., Pekin, IL 61554.
Washington Plaza, 40 Sunnyland Plaza, Washington, IL 61571.
5311 West American Prairie Dr., Peoria, IL 61615.
5567 Bishop Ave., Inver Grove Heights, MN 55076.
1188 Helmo Ave. N, Oakdale, MN 55128.
10051 Woodcrest Dr. NW., Coon Rapids, MN 55433.
12575 Elm Creek Blvd. N, Maple Grove, MN 55311.
2430 County Hwy 10, Mounds View, MN 55112.
363 Mt Hope Ave., Rockaway, NJ 07866.
25 Centre St., Sparta Township, NJ 07871.
1021 Route 22, Mountainside, NJ 07092.
250 East Broad St., Westfield, NJ 07090.
25 North Ave. W., Cranford NJ 07016.
200 SW., C Ave., Lawton, OK 73501.
2803 NW., 67th St., Lawton, OK 73505.
Tilghman Square, 4608 Broadway, Allentown, PA 18104.
2805 Center Valley Pkwy, Center Valley, PA 18034.
1700 Catasauqua Rd., Allentown, PA 18109.
6091 McKee Rd., Fitchburg, WI 53719.
430 North Midvale Blvd., Madison, WI 53705.
APPENDIX B
Address
1 ................
2 ................
AMC Barrett Commons 24 ...........................................................
AMC Colonial 18 ...........................................................................
3 ................
4 ................
5 ................
AMC Crossroads Mall 16 ..............................................................
AMC Dublin Village 18 ..................................................................
AMC Dutch Square 14 ..................................................................
6 ................
7 ................
AMC Showplace Naperville 16 .....................................................
AMC Newport On the Levee 20 ...................................................
8 ................
9 ................
AMC Starplex Rio Grande 10 .......................................................
AMC Southpoint 17 .......................................................................
10
11
12
13
14
15
16
srobinson on DSK5SPTVN1PROD with NOTICES
Theatres
..............
..............
..............
..............
..............
..............
..............
AMC Loews Waterfront 22 ...........................................................
Sundance Kabuki ..........................................................................
Sundance Cinemas Houston ........................................................
Sundance Cinemas Seattle ..........................................................
Sundance Sunset Cinema ............................................................
Sundance Carmike Madison * .......................................................
AMC Dine-in Theatres Buckhead 6 ..............................................
17 ..............
AMC Easton Town Center 30 with Dine-in Theatres & IMAX .....
18 ..............
19 ..............
AMC Dine-in Theatres Esplanade 14 ...........................................
AMC Grapevine Mills 30 with Dine-in Theatres ...........................
20
21
22
23
AMC
AMC
AMC
AMC
2600 Cobb Pl. Ln. NW., Kennesaw, GA 30144.
Lawrenceville Market Shopping Center, 825 LawrencevilleSuwanee Rd., Lawrenceville, GA 30043.
1211 E Interstate 240 Service Rd., Oklahoma City, OK 73149.
Dublin Village Center, 6700 Village Pkwy, Dublin, OH 43017.
Dutch Square Mall, 421 Bush River Rd. #80, Columbia, SC
29210.
2815 Show Place Dr., Naperville, IL 60564.
Newport on the Levee, Levy, 1 Levee Way #4100, Newport, KY
41071.
4586 E. US Hwy 83, Rio Grande City, TX 78582.
The Streets at Southpoint, 8030 Renaissance Pkwy, Durham,
NC 27713.
300 W. Waterfront Dr., West Homestead, PA 15120.
1881 Post St., San Francisco, CA 94115.
Bayou Place, 510 Texas Ave., Houston, TX 77002.
4500 9th Ave. NE., Seattle, WA 98105.
8000 Sunset, 8000 Sunset Blvd., Los Angeles, CA 90046.
430 North Midvale Blvd., Madison, WI 53705.
Georgia Atlanta Tower Place, Tower Place, 3340 Peachtree Rd
NE., Atlanta, GA 30326.
Easton Town Center, 275 Easton Station, Columbus, OH
43219.
2515 E Camelback Rd., Phoenix, AZ 85016.
Grapevine Mills, 3150 Grapevine Mills Pkwy, Grapevine, TX
76051.
19919 Lyndon B Johnson Fwy, Mesquite, TX 75149.
23955 E Plaza Ave., Aurora, CO 80016.
12657 Olive Blvd., Creve Couer, MO 63141.
200 SW C Ave., Lawton, OK 73501.
..............
..............
..............
..............
VerDate Sep<11>2014
Mesquite 30 with Dine-in Theatres ......................................
Dine-in Theatres Southlands 16 Featuring Red Kitchen ....
Dine-in Theatres West Olive 16 ..........................................
Lawton 12 * ..........................................................................
19:18 Dec 29, 2016
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96507
APPENDIX B—Continued
Theatres
24 ..............
Address
AMC Dine-in Theatres Yorktown 18 .............................................
Yorktown Center, 80 Yorktown Shopping Center, Lombard, IL
60148.
* Transferred to the Screenvision network only to the extent AMC retains these theatres.
Washington, DC 20530 (telephone: 202–
305–8376).
[FR Doc. 2016–31652 Filed 12–29–16; 8:45 am]
BILLING CODE 4410–11–P
Patricia A. Brink,
Director of Civil Enforcement.
DEPARTMENT OF JUSTICE
United States District Court for the
District of Columbia
Antitrust Division
srobinson on DSK5SPTVN1PROD with NOTICES
United States v. Clear Channel
Outdoor Holdings, Inc., et al.;
Proposed Final Judgment and
Competitive Impact Statement
Notice is hereby given pursuant to the
Antitrust Procedures and Penalties Act,
15 U.S.C. 16(b)–(h), that a proposed
Final Judgment, Asset Preservation
Stipulation and Order, and Competitive
Impact Statement have been filed with
the United States District Court for the
District of Columbia in United States of
America v. Clear Channel Outdoor
Holdings, Inc., Civil Action No. 1:16–
cv–02497. On December 22, 2016, the
United States filed a Complaint alleging
that a proposed transaction between
Clear Channel Outdoor Holdings, Inc.
and Fairway Media Group, LLC would
violate Section 7 of the Clayton Act, 15
U.S.C. 18. The proposed Final
Judgment, filed at the same time as the
Complaint, resolves the case by
requiring Clear Channel and Fairway to
divest certain billboards in Atlanta,
Georgia, and Indianapolis, Indiana.
Copies of the Complaint, proposed
Final Judgment, and Competitive Impact
Statement are available for inspection
on the Antitrust Division’s Web site at
http://www.justice.gov/atr and at the
Office of the Clerk of the United States
District Court for the District of
Columbia. Copies of these materials may
be obtained from the Antitrust Division
upon request and payment of the
copying fee set by Department of Justice
regulations.
Public comment is invited within 60
days of the date of this notice. Such
comments, including the name of the
submitter, and responses thereto, will be
posted on the Antitrust Division’s Web
site, filed with the Court, and, under
certain circumstances, published in the
Federal Register. Comments should be
directed to Owen M. Kendler, Acting
Chief, Litigation III Section, Antitrust
Division, Department of Justice, 450
Fifth Street NW., Suite 4000,
VerDate Sep<11>2014
19:18 Dec 29, 2016
Jkt 241001
United States of America, Department of
Justice, Antitrust Division, 450 Fifth Street
NW., Suite 7000, Washington, DC 20530,
Plaintiff, v. Clear Channel Outdoor Holdings,
Inc., 200 East Basse Road, Suite 100, San
Antonio, TX 78209, and Fairway Media
Group, LLC, 3801 Capital City Blvd., Lansing,
MI 48906, Defendants.
Case No.: 1:16–cv–02497
Judge: Randolph D. Moss
Filed: 12/22/2016
COMPLAINT
The United States of America
(‘‘Plaintiff’’), acting under the direction
of the Attorney General of the United
States, brings this civil action to enjoin
the transaction between Defendants
Clear Channel Outdoor Holdings, Inc.
(‘‘Clear Channel’’) and Fairway Media
Group, LLC (‘‘Fairway’’) and to obtain
other equitable relief.
I. NATURE OF THE ACTION
1. Clear Channel and Fairway sell
outdoor advertising on billboards to
local and national customers in
numerous metropolitan areas
throughout the United States. Among
other metropolitan areas, they compete
head-to-head to sell advertising on
billboards that are located in
Indianapolis, Indiana and Atlanta,
Georgia (collectively, the ‘‘Metropolitan
Markets’’). Within each of the
Metropolitan Markets, Clear Channel
and Fairway own and operate billboards
that are located in close proximity to
each other and therefore constitute
attractive competitive alternatives for
advertisers that seek to advertise on
billboards in those specific areas.
2. On March 3, 2016, Clear Channel
and Fairway entered into an asset
exchange pursuant to which Clear
Channel would acquire certain Fairway
billboards located in Atlanta and
Fairway would acquire certain Clear
Channel billboards located in
Indianapolis, along with billboards in
other metropolitan areas.
3. If consummated, the proposed
transaction would eliminate the
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Fmt 4703
Sfmt 4703
substantial head-to-head competition
between Clear Channel and Fairway
within each of the Metropolitan
Markets. Head-to-head competition
between Clear Channel and Fairway
billboards that are located in close
proximity to each other in each of the
Metropolitan Markets has benefitted
advertisers through lower prices and
better services. The proposed
transaction threatens to end that
competition in these areas in violation
of Section 7 of the Clayton Act, 15
U.S.C. 18, and should be enjoined.
II. JURISDICTION, VENUE, AND
COMMERCE
4. The United States brings this action
pursuant to Section 15 of the Clayton
Act, as amended, 15 U.S.C. 25, to
prevent and restrain Defendants from
violating Section 7 of the Clayton Act,
15 U.S.C. 18.
5. The Court has subject matter
jurisdiction over this action pursuant to
Section 15 of the Clayton Act, 15 U.S.C.
25, and 28 U.S.C. 1331, 1337(a), and
1345.
6. Defendants are engaged in
interstate commerce and in activities
substantially affecting interstate
commerce. They each own and operate
billboards in various locations
throughout the United States and sell
outdoor advertising in the geographic
areas where their billboards are located.
Their sale of advertising on billboards
has had a substantial effect upon
interstate commerce.
7. Defendants have consented to
venue and personal jurisdiction in this
district. Venue is also proper in this
district under Section 12 of the Clayton
Act, 15 U.S.C. 22, and 28 U.S.C. 1391(c).
III. THE DEFENDANTS AND THE
TRANSACTION
8. Clear Channel is a Delaware
corporation, with its corporate
headquarters in San Antonio, Texas.
Clear Channel is one of the largest
outdoor advertising companies in the
United States. Clear Channel reported
consolidated revenues of over $2.8
billion in 2015. As of December 31,
2015, Clear Channel owned or operated
more than 650,000 outdoor advertising
displays worldwide. It owns and
operates billboards in each of the
Metropolitan Markets.
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Agencies

[Federal Register Volume 81, Number 251 (Friday, December 30, 2016)]
[Notices]
[Pages 96486-96507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31652]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
United States v. AMC Entertainment Holdings, Inc., et al.;
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Hold Separate Stipulation and Order, and Competitive Impact Statement
have been filed with the United States District Court for the District
of Columbia in United States of America v. AMC Entertainment Holdings,
Inc., et al., Civil Action No. 1:16-cv-2475. On December 20, 2016, the
United States filed a Complaint alleging that the proposed acquisition
by AMC Entertainment Holdings, Inc. of Carmike Cinemas, Inc. would
violate Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed Final
Judgment, filed at the same time as the Complaint, requires AMC to
divest certain theatre assets, reduce its equity holdings and
relinquish its governance rights in National CineMedia, LLC, and
complete screen transfers to the cinema advertising network of
Screenvision, LLC.
Copies of the Complaint, proposed Final Judgment, Hold Separate
Stipulation and Order, and Competitive Impact Statement are available
for inspection on the Antitrust Division's website at http://www.justice.gov/atr and at the Office of the Clerk of the United States
District Court for the District of Columbia. Copies of these materials
may be obtained from the Antitrust Division upon request and payment of
the copying fee set by Department of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, including the name of the submitter, and
responses thereto, will be posted on the Antitrust Division's website,
filed with the Court, and, under certain circumstances, published in
the Federal Register.Comments should be directed to Owen M. Kendler,
Acting Chief, Litigation III Section, Antitrust Division, Department of
Justice, 450 Fifth Street N.W., Suite 4000, Washington, DC 20530
(telephone: 202-305-8376).
Patricia A. Brink,
Director of Civil Enforcement.
United States District Court for the District of Columbia
United States of America, Antitrust Division, 450 Fifth Street NW.,
Suite 4000, Washington, DC 20530, Plaintiff, v. AMC Entertainment
Holdings, Inc., One AMC Way, 11500 Ash Street, Leawood, KS 64105, and,
Carmike Cinemas, Inc., 1301 First Avenue, Columbus, GA 31901,
Defendants.
Case No.: 1:16-cv-02475.
Judge: Randolph D. Moss.
Filed: 12/20/2016.
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil antitrust
action to prevent the proposed acquisition by Defendant AMC
Entertainment Holdings, Inc. (``AMC'') of all of the outstanding voting
securities of Defendant Carmike Cinemas, Inc. (``Carmike'').
I. Nature of Action
1. AMC is a significant competitor to Carmike in the exhibition of
first-run commercial movies in multiple areas around the United States,
including the areas in and around Montgomery, Alabama; Destin and
Miramar Beach, Florida; Orange Park and Fleming Island, Florida;
Cumming, Georgia; Lithonia and Conyers, Georgia; Crestwood and Lansing,
Illinois; Normal and Bloomington, Illinois; Pekin, Peoria, and
Washington, Illinois; Inver Grove Heights and Oakdale, Minnesota; Coon
Rapids and Mounds View, Minnesota; Rockaway and Sparta, New Jersey;
Westfield and Cranford, New Jersey; Lawton, Oklahoma; Allentown and
Center Valley, Pennsylvania; and Madison and Fitchburg, Wisconsin
(collectively, the ``Local Markets''). If AMC acquires Carmike, AMC
would obtain direct control of one of its most significant competitors
in the Local Markets, likely resulting in higher ticket prices and/or a
lower quality viewing experience for moviegoers in these areas.
2. AMC is also a founding member of National CineMedia, LLC
(``NCM'')--the nation's largest provider of preshow services to
exhibitors--and remains one of NCM's largest investors and exhibitors.
Carmike is the largest exhibitor in the network of NCM's main
competitor, Screenvision Exhibitions, Inc. (``Screenvision''), and is
one of Screenvision's largest investors. NCM and Screenvision are the
country's two leading preshow cinema advertising networks and together
cover over 80% of movie theatre screens in the United States. If AMC's
proposed acquisition of Carmike were to proceed, it would likely weaken
competition between NCM and Screenvision because they would have a
significant common owner. In addition, the proposed merger would
undermine Screenvision's ability to compete for advertisers and
exhibitors because, as explained below, Screenvision will no longer be
able to rely on Carmike's growth to expand its network. The loss of
competition in the markets for preshow services and cinema advertising
will likely result in lower preshow services revenues to exhibitors,
higher prices to cinema advertisers, and lower quality preshow services
and advertising.
3. Accordingly, AMC's proposed acquisition of Carmike likely would
substantially lessen competition in each of the Local Markets for the
exhibition of first-run, commercial movies and in the markets for the
sale of preshow services to exhibitors and the sale of cinema
advertising to advertisers in the United States in violation of Section
7 of the Clayton Act, 15 U.S.C. 18, and should be enjoined.
[[Page 96487]]
II. Jurisdiction and Venue
4. This action is filed by the United States pursuant to Section 15
of the Clayton Act, as amended, 15 U.S.C. 25, to obtain equitable
relief and to prevent a violation of Section 7 of the Clayton Act, as
amended, 15 U.S.C. 18.
5. The distribution and theatrical exhibition of first-run,
commercial films, the provision of preshow services to thousands of
theatres across the United States, and the sale of cinema advertising
to advertisers throughout the United States are commercial activities
that substantially affect, and are in the flow of, interstate trade and
commerce. Defendants' activities in purchasing preshow advertising and
other content, equipment, services, and supplies, as well as licensing
films for exhibition, substantially affect interstate commerce.
6. The Court has jurisdiction over the subject matter of this
action pursuant to 15 U.S.C. 25 and 28 U.S.C. 1331, 1337(a), and 1345.
7. Defendants consent to personal jurisdiction and venue in this
district, and AMC operates theatres in this district. This Court has
personal jurisdiction over each Defendant, and venue is proper under 15
U.S.C. 22, and 28 U.S.C. 1391(b) and (c).
III. Defendants and the Proposed Acquisition
8. Defendant AMC is a Delaware corporation with its headquarters in
Leawood, Kansas. As of September 30, 2016, AMC operated approximately
388 theatres with a total of 5,295 screens located across 31 states and
the District of Columbia. AMC reported approximately $1.89 billion in
U.S. box office revenues in 2015 and approximately $1.46 billion in
U.S. box office revenues for the first nine months of 2016. Measured by
number of theatres, screens, and box office revenue, AMC is the second-
largest theatre circuit in the United States.
9. Defendant Carmike is a Delaware corporation with its
headquarters in Columbus, Georgia. As of September 30, 2016, Carmike
operated approximately 271 movie theatres with a total of 2,917 screens
located across 41 states. Carmike reported approximately $490.0 million
in U.S. box office revenues in 2015, and approximately $370.8 million
in U.S. box office revenue for the first nine months of 2016. Measured
by number of theatres, screens, and box office revenue, Carmike is the
fourth-largest theatre circuit in the United States.
10. On March 3, 2016, AMC and Carmike executed an Agreement and
Plan of Merger, under which AMC would acquire all outstanding voting
securities of Carmike for approximately $1.2 billion. If the parties
consummate the merger, AMC will be the nation's largest theatre
exhibitor.
IV. Background
A. Movie Theatres
11. Viewing movies in a theatre is a popular pastime. Over 1.3
billion movie tickets were sold in the United States and Canada in
2015, with total box office revenues reaching approximately $11.1
billion.
12. Companies that operate movie theatres are called
``exhibitors.'' Some exhibitors own a single theatre, whereas others
own a circuit of theatres within one or more regions of the United
States. AMC and Carmike are two of the largest exhibitors in the United
States.
13. Exhibitors set ticket prices for a theatre based on a number of
factors, including the age and condition of the theatre, the number and
type of amenities the theatre offers (such as the range of snacks, food
and beverages offered, the size of its screens and quality of its sound
systems, and whether it provides stadium and/or reserved seating),
competitive pressures facing the theatre (such as the price of tickets
at nearby theatres, the age and condition of those theatres, and the
number and types of amenities they offer), and the population
demographics and density surrounding the theatre.
B. Preshow Services and Cinema Advertising
14. On almost all movie screens, before the previews and feature
film begin, the audience is presented with a preshow--a video program
consisting of national, regional, and local advertisements; special
content segments (e.g., a ``behind the scenes'' look at a new TV show);
and theatre announcements. The preshow is typically twenty to thirty
minutes long and is designed to engage moviegoers as they wait for the
feature film to start.
15. Cinema advertising networks act as intermediaries between
exhibitors and advertisers. For advertisers, the preshow is a unique
opportunity to reach an attentive audience using a large screen with
the benefit of high-quality video and sound. For exhibitors, the
preshow provides a lucrative way to supplement revenue earned through
ticket sales and concessions at a time when its movie screens screens
are otherwise unused.
16. To obtain preshow services, exhibitors typically enter into
long-term, exclusive contracts with the cinema advertising networks.
The contracts for the largest few exhibitors, including AMC and
Carmike, tend to be longest--approximately 30 years--whereas the
contracts for the smaller exhibitors tend to last five to ten years.
Under the contracts, the networks commit to marketing the preshow
screen time to advertisers and packaging the advertisements and other
content into an entertaining video program. Exhibitors agree to display
the preshow on their movie screens. The cinema advertising networks
retain a negotiated portion of the advertising proceeds for the
services they provide, and the exhibitors retain the remaining portion
of the advertising proceeds.
17. Cinema advertising networks sell advertising time in preshows
to advertisers seeking to market their products on a local, regional,
or national basis. Generally, national advertisers seek to purchase
cinema advertising from firms that can provide access to a nationwide
network of movie screens. Thus, the cinema advertising networks work
hard to enter into contracts with exhibitors throughout the country and
compete vigorously to woo exhibitors away from each other.
18. NCM and Screenvision are the dominant cinema advertising
networks in the United States. They compete head-to-head to win
exclusive contracts with exhibitors and to offer advertisers access to
their exhibitors' movie audiences. Together, NCM and Screenvision serve
over 80% of all movie screens in the country.
19. NCM has a national cinema advertising network that covers about
20,500 of the approximately 40,500 movie screens in the United States.
In 2015, NCM earned approximately $447 million in gross advertising
revenue.
20. National CineMedia, Inc. is the managing member and owner of
43.6% of NCM. The remaining 56.4% is owned by the three largest
exhibitors in the United States: AMC (17.4%), Regal Entertainment Group
(``Regal'') (19.8%), and Cinemark Holdings, Inc. (``Cinemark'')
(19.2%). Under NCM's governing documents, post-merger, AMC ownership
would increase to approximately 26.5%.
21. Regal, Cinemark, and AMC (the so-called ``Founding Members'')
exercise a significant degree of control and influence over NCM and
account for approximately 83% of its screens. In addition to holding a
majority of NCM's equity, they have representatives on NCM's Board of
Directors and enjoy substantial governance rights, including approval
rights over certain NCM contracts with competing exhibitors. NCM
management routinely consults with executives of the Founding
[[Page 96488]]
Members in making business decisions. AMC can fill two seats on the NCM
board.
22. Screenvision has a national cinema advertising network that
covers 14,300 screens in more than 2,300 theatres. Carmike is by far
the largest exhibitor in Screenvision's network, and, as of September
30, 2016, owned approximately 19% of Screenvision through SV Holdco,
LLC, a holding company that owns and operates Screenvision. Carmike
also holds a seat on Screenvision's board of directors and possesses
certain governance rights. No other major theatre exhibitor holds
significant equity interests in Screenvision. Following the merger, AMC
plans to divest or convert Carmike's Screenvision shares such that AMC
will hold no more than 10% of Screenvision's voting stock.
V. Relevant Markets
A. The Exhibition of First-Run, Commercial Movies in the Local Markets
23. The exhibition of first-run, commercial movies in the Local
Markets are relevant markets under Section 7 of the Clayton Act, 15
U.S.C. 18.
The Exhibition of First-Run, Commercial Movies Product Market
24. Movies are a unique form of entertainment. The experience of
viewing a movie in a theatre is an inherently different experience from
live entertainment (e.g., a stage production or attending a sporting
event) or viewing a movie in the home (e.g., through streaming video,
on a DVD, or via pay-per-view).
25. Reflecting the significant differences of viewing a movie in a
theatre, ticket prices for movies generally differ from prices for
other forms of entertainment. For example, typically, tickets for live
entertainment are significantly more expensive than a movie ticket,
whereas the costs of home viewing through streaming video, a DVD
rental, or pay-per-view is usually significantly less expensive than
viewing a movie in a theatre.
26. Viewing a movie at home differs from viewing a movie in a
theatre in many ways. For example, the size of the screens differ, the
sophistication of the sound systems differ, and, unlike at home, in the
theatre, one has the social experience of viewing a movie with other
patrons.
27. In addition, the most popular newly released or ``first-run''
movies are not available for home viewing at the time they are released
in theatres. Movies are considered to be in their ``first-run'' during
the four to five weeks following initial release in a given locality.
If successful, a movie may be exhibited at other theatres after the
first-run as part of a second or subsequent run (often called a ``sub-
run'' or ``second-run'').
28. Moviegoers generally do not regard sub-run movies as an
adequate substitute for first-run movies. Reflecting the significant
difference between viewing a newly released, first-run movie and an
older sub-run movie, tickets at theatres exhibiting first-run movies
usually cost significantly more than tickets at sub-run theatres.
29. Art movies and foreign-language movies are also not reasonable
substitutes for commercial, first-run movies. Art movies, which include
documentaries, are sometimes referred to as independent films. Although
art and foreign-language movies appeal to some viewers of commercial
movies, art and foreign-language movies tend to have more narrow appeal
and typically attract an older audience than commercial movies.
Exhibitors consider the operation of theatres that predominantly
exhibit art and foreign-language movies to be distinct from the
operation of theatres that predominantly exhibit commercial movies.
30. A hypothetical monopolist controlling the exhibition of all
first-run, commercial movies in a relevant geographic market would
profitably impose at least a small but significant and non-transitory
increase (SSNIP) in ticket prices. Thus, the exhibition of first-run,
commercial movies is a relevant product market and line of commerce
under Section 7 of the Clayton Act in which to assess the competitive
effects of this acquisition.
Relevant Geographic Markets for the Exhibition of First-Run, Commercial
Movies
31. Moviegoers typically are not willing to travel very far from
their home to attend a movie. As a result, geographic markets for the
exhibition of first-run, commercial movies are relatively local. Each
of the following areas is a relevant geographic market and section of
the country for purposes of Section 7 of the Clayton Act.
Area In and Around Montgomery, Alabama
32. AMC and Carmike account for all of the first-run, commercial
movie box office revenue in and around Montgomery, Alabama. The only
theatres that predominantly show first-run commercial movies in this
area are the Carmike Chantilly 13 BigD, the Carmike Promenade 12, and
the AMC Festival Plaza 16. No other predominately first-run, commercial
movie theatre is in the vicinity of the AMC and Carmike theatres.
33. Moviegoers who reside in and around Montgomery, Alabama are
unlikely to travel significant distances out of that area to attend a
first-run, commercial movie. A small but significant increase in the
price of tickets by a hypothetical monopolist of first-run, commercial
movie theatres in this area would likely not cause a sufficient number
of moviegoers to travel out of that area to make the increase
unprofitable. The area in and around Montgomery, Alabama constitutes a
relevant geographic market in which to assess the competitive effects
of this acquisition.
Area In and Around Destin and Miramar Beach, Florida
34. AMC and Carmike account for all of the first-run, commercial
movie box office revenue in and around Destin and Miramar Beach,
Florida. The only theatres that predominantly show first-run commercial
movies in this area are the AMC Destin Commons 14 and the Carmike
Boulevard 10 BigD. No other predominantly first-run, commercial movie
theatre is in the vicinity of the AMC and Carmike theatres.
35. Moviegoers who reside in and around Destin and Miramar Beach,
Florida are unlikely to travel significant distances out of that area
to attend a first-run, commercial movie. A small but significant
increase in the price of tickets by a hypothetical monopolist of first-
run, commercial movie theatres in this area would likely not cause a
sufficient number of moviegoers to travel out of that area to make the
increase unprofitable. The area in and around Destin and Miramar Beach,
Florida constitutes a relevant geographic market in which to assess the
competitive effects of this acquisition.
Area In and Around Orange Park and Fleming Island, Florida
36. AMC and Carmike account for the majority of the first-run,
commercial movie box office revenue in and around Orange Park and
Fleming Island, Florida. The only theatres that predominantly show
first-run commercial movies in this area are the Carmike Fleming Island
12, the AMC Orange Park 24, and the EPIC Theater at Oakleaf. Other than
the EPIC Theater, no other first-run, commercial movie theatre is in
the vicinity of the Carmike and AMC theatres.
37. Moviegoers who reside in and around Orange Park and Fleming
Island, Florida are unlikely to travel significant
[[Page 96489]]
distances out of that area to attend a first-run, commercial movie. A
small but significant increase in the price of tickets by a
hypothetical monopolist of first-run, commercial movie theatres in this
area would likely not cause a sufficient number of moviegoers to travel
out of that area to make the increase unprofitable. The area in and
around Orange Park and Fleming Island, Florida constitutes a relevant
geographic market in which to assess the competitive effects of this
acquisition.
Area In and Around Cumming, Georgia
38. AMC and Carmike account for the majority of the first-run,
commercial movie box office revenue in and around Cumming, Georgia. The
only theatres that predominantly show first-run commercial movies in
this area are the Carmike Movies 400 12, the AMC Avenue Forsyth 12, and
the Regal Avalon 12. Other than the Regal Avalon 12, no other
predominantly first-run, commercial movie theatre is in the vicinity of
the Carmike and AMC theatres.
39. Moviegoers who reside in and around Cumming, Georgia are
unlikely to travel significant distances out of that area to attend a
first-run, commercial movie. A small but significant increase in the
price of tickets by a hypothetical monopolist of first-run, commercial
movie theatres in this area would likely not cause a sufficient number
of moviegoers to travel out of that area to make the increase
unprofitable. The area in and around Cumming, Georgia constitutes a
relevant geographic market in which to assess the competitive effects
of this acquisition.
Area In and Around Lithonia and Conyers, Georgia
40. AMC and Carmike account for all of the first-run, commercial
movie box office revenue in and around Lithonia and Conyers, Georgia.
The only theatres that predominantly show first-run commercial movies
in this area are the Carmike Conyers Crossing 16 and the AMC Stonecrest
Mall 16. No other predominately first-run, commercial movie theatre is
in the vicinity of the AMC and Carmike theatres.
41. Moviegoers who reside in and around Lithonia and Conyers,
Georgia are unlikely to travel significant distances out of that area
to attend a first-run, commercial movie. A small but significant
increase in the price of tickets by a hypothetical monopolist of first-
run, commercial movie theatres in this area would likely not cause a
sufficient number of moviegoers to travel out of that area to make the
increase unprofitable. The area in and around Lithonia and Conyers,
Georgia constitutes a relevant geographic market in which to assess the
competitive effects of this acquisition.
Area In and Around Crestwood and Lansing, Illinois
42. AMC and Carmike account for the majority of the first-run,
commercial movie box office revenue in and around Crestwood and
Lansing, Illinois. The only theatres that predominantly show first-run
commercial movies in this area are the Carmike Digiplex Lansing 8, the
AMC Crestwood 18, the AMC Schererville 12, the AMC Schererville 16, the
Marcus Country Club Hills Cinema, the Marcus Chicago Heights Cinema,
the Studio Movie Grill Chatham, and the Hoosier Theater. Other than the
Marcus Country Club Hills Cinema, the Marcus Chicago Heights Cinema,
the Studio Movie Grill Chatham, and the Hoosier Theater, no other
predominantly first-run, commercial movie theatre is in the vicinity of
the Carmike and AMC theatres.
43. Moviegoers who reside in and around Crestwood and Lansing,
Illinois are unlikely to travel significant distances out of that area
to attend a first-run, commercial movie. A small but significant
increase in the price of tickets by a hypothetical monopolist of first-
run, commercial movie theatres in this area would likely not cause a
sufficient number of moviegoers to travel out of that area to make the
increase unprofitable. The area in and around Crestwood and Lansing,
Illinois constitutes a relevant geographic market in which to assess
the competitive effects of this acquisition.
Area In and Around Normal and Bloomington, Illinois
44. AMC and Carmike account for the majority of the first-run,
commercial movie box office revenue in and around Normal and
Bloomington, Illinois. The only theatres that predominantly show first-
run commercial movies in this area are the Carmike Ovation 10, the AMC
Normal 14, and the Wehrenberg Bloomington Galaxy 14 Cinema. Other than
the Wehrenberg Bloomington Galaxy 14 Cinema, no other predominantly
first-run, commercial movie theatre is in the vicinity of the AMC and
Carmike theatres.
45. Moviegoers who reside in and around Normal and Bloomington,
Illinois are unlikely to travel significant distances out of that area
to attend a first-run, commercial movie. A small but significant
increase in the price of tickets by a hypothetical monopolist of first-
run, commercial movie theatres in this area would likely not cause a
sufficient number of moviegoers to travel out of that area to make the
increase unprofitable. The area in and around Normal and Bloomington,
Illinois constitutes a relevant geographic market in which to assess
the competitive effects of this acquisition.
Area In and Around Pekin, Peoria, and Washington, Illinois
46. AMC and Carmike account for the majority of the first-run,
commercial movie box office revenue in and around Pekin, Peoria, and
Washington, Illinois. The only theatres that predominantly show first-
run commercial movies in this area are the Carmike Sunnyland 10, the
Carmike Grand Prairie 18, the AMC Pekin 14, the Goodrich Willow Knolls
14, the Morton Cinema, and the Landmark Cinemas. Other than the
Goodrich Willow Knolls, the Morton Cinema, and the Landmark Cinemas, no
predominantly first-run, commercial movie theatre is in the vicinity of
the AMC and Carmike theatres.
47. Moviegoers who reside in and around Pekin, Peoria, and
Washington, Illinois are unlikely to travel significant distances out
of that area to attend a first-run, commercial movie. A small but
significant increase in the price of tickets by a hypothetical
monopolist of first-run, commercial movie theatres in this area would
likely not cause a sufficient number of moviegoers to travel out of
that area to make the increase unprofitable. The area in and around
Pekin, Peoria, and Washington, Illinois constitutes a relevant
geographic market in which to assess the competitive effects of this
acquisition.
Area In and Around Inver Grove Heights and Oakdale, Minnesota
48. AMC and Carmike account for nearly a majority of the first-run,
commercial movie box office revenue in and around Inver Grove Heights
and Oakdale, Minnesota. The only theatres that predominantly show
first-run commercial movies in this area are the AMC Inver Grove 16,
the Carmike Oakdale 20, the Woodbury 10, and the Marcus Oakdale 17.
Other than the Woodbury 10 and the Marcus Oakdale 17, no other
predominantly first-run, commercial movie theatre is in the vicinity of
the Carmike and AMC theatres.
49. Moviegoers who reside in and around Inver Grove Heights and
Oakdale, Minnesota are unlikely to travel significant distances out of
that area to attend a first-run, commercial movie. A small but
significant increase in the price of tickets by a hypothetical
monopolist of first-run, commercial
[[Page 96490]]
movie theatres in this area would likely not cause a sufficient number
of moviegoers to travel out of that area to make the increase
unprofitable. The area in and around Inver Grove Heights and Oakdale,
Minnesota constitutes a relevant geographic market in which to assess
the competitive effects of this acquisition.
Area In and Around Coon Rapids and Mounds View, Minnesota
50. AMC and Carmike account for the majority of the first-run,
commercial movie box office revenue in and around Coon Rapids and
Mounds View, Minnesota. The only theatres that predominantly show
first-run commercial movies in this area are the AMC Coon Rapids 16,
the AMC Arbor Lakes, the Carmike Wynnsong 15, the Andover 10, the Regal
Brooklyn Center 20, and the Mann Champlin. Other than the Andover 10,
the Regal Brooklyn Center 20, and the Mann Champlin, no other
predominantly first-run, commercial movie theatre is in the vicinity of
the Carmike and AMC theatres.
51. Moviegoers who reside in and around Coon Rapids and Mounds
View, Minnesota are unlikely to travel significant distances out of
that area to attend a first-run, commercial movie. A small but
significant increase in the price of tickets by a hypothetical
monopolist of first-run, commercial movie theatres in this area would
likely not cause a sufficient number of moviegoers to travel out of
that area to make the increase unprofitable. The area in and around
Coon Rapids and Mounds View, Minnesota constitutes a relevant
geographic market in which to assess the competitive effects of this
acquisition.
Area In and Around Rockaway and Sparta, New Jersey
52. AMC and Carmike account for all of the first-run, commercial
movie box office revenue in and around Rockaway and Sparta, New Jersey.
The only theatres that predominantly show first-run commercial movies
in this area are the Carmike Digiplex Sparta 3 and the AMC Rockaway 16.
No other predominantly first-run, commercial movie theatre is in the
vicinity of the Carmike and AMC theatres.
53. Moviegoers who reside in and around Rockaway and Sparta, New
Jersey are unlikely to travel significant distances out of that area to
attend a first-run, commercial movie. A small but significant increase
in the price of tickets by a hypothetical monopolist of first-run,
commercial movie theatres in this area would likely not cause a
sufficient number of moviegoers to travel out of that area to make the
increase unprofitable. The area in and around Rockaway and Sparta, New
Jersey constitutes a relevant geographic market in which to assess the
competitive effects of this acquisition.
Area In and Around Westfield and Cranford, New Jersey
54. AMC and Carmike account for the majority of the first-run,
commercial movie box office revenue in and around Westfield and
Cranford, New Jersey. Carmike operates two first-run, commercial movie
theatres in the area: the Digiplex Rialto Westfield and the Digiplex
Cranford 5. AMC operates five theaters in the area: the Mountainside
10, the Aviation 12, the Jersey Gardens 20, the Menlo Park 12, and the
Essex Green 9. While there are several other first-run, commercial
movie theatres operating in the vicinity of the AMC and Carmike
theatres in the area, AMC and Carmike are first and fourth,
respectively, in term of the number of screens and box office revenue.
55. Moviegoers who reside in and around Westfield and Cranford, New
Jersey are unlikely to travel significant distances out of that area to
attend a first-run, commercial movie. A small but significant increase
in the price of tickets by a hypothetical monopolist of first-run,
commercial movie theatres in this area would likely not cause a
sufficient number of moviegoers to travel out of that area to make the
increase unprofitable. The area in and around Westfield and Cranford,
New Jersey constitutes a relevant geographic market in which to assess
the competitive effects of this acquisition.
Area In and Around Lawton, Oklahoma
56. AMC and Carmike account for all of the first-run, commercial
movie box office revenue in and around Lawton, Oklahoma. The only
theatres that predominantly show first-run commercial movies in this
area are the Carmike Patriot 13 and the AMC Lawton 12. No other
predominately first-run, commercial movie theatre is in the vicinity of
the Carmike and AMC theatres.
57. Moviegoers who reside in and around Lawton, Oklahoma are
unlikely to travel significant distances out of that area to attend a
first-run, commercial movie. A small but significant increase in the
price of tickets by a hypothetical monopolist of first-run, commercial
movie theatres in this area would likely not cause a sufficient number
of moviegoers to travel out of that area to make the increase
unprofitable. The area in and around Lawton, Oklahoma constitutes a
relevant geographic market in which to assess the competitive effects
of this acquisition.
Area In and Around Allentown and Center Valley, Pennsylvania
58. AMC and Carmike account for all of the first-run, commercial
movie box office revenue in and around Allentown and Center Valley,
Pennsylvania. The only theatres that predominantly show first-run
commercial movies in this area are the Carmike Promenade 16 IMAX, the
Carmike Promenade 16, and the AMC Tilghman Square 8. No other
predominately first-run, commercial movie theatre is in the vicinity of
the Carmike and AMC theatres.
59. Moviegoers who reside in and around Allentown and Center
Valley, Pennsylvania are unlikely to travel significant distances out
of that area to attend a first-run, commercial movie. A small but
significant increase in the price of tickets by a hypothetical
monopolist of first-run, commercial movie theatres in this area would
likely not cause a sufficient number of moviegoers to travel out of
that area to make the increase unprofitable. The area in and around
Allentown and Center Valley, Pennsylvania constitutes a relevant
geographic market in which to assess the competitive effects of this
acquisition.
Area In and Around Madison and Fitchburg, Wisconsin
60. AMC and Carmike account for the majority of the first-run,
commercial movie box office revenue in and around Madison and
Fitchburg, Wisconsin. The only theatres that predominantly show first-
run commercial movies in this area are the Carmike Sundance Madison 6,
the AMC Fitchburg 18, and the Marcus Point Cinema 15. Other than the
Marcus Point Cinema 15, no predominately first-run, commercial movie
theatre is in the vicinity of the AMC and Carmike theatres.
61. Moviegoers who reside in and around Madison and Fitchburg,
Wisconsin are unlikely to travel significant distances out of that area
to attend a first-run, commercial movie. A small but significant
increase in the price of tickets by a hypothetical monopolist of first-
run, commercial movie theatres in this area would likely not cause a
sufficient number of moviegoers to travel out of that area to make the
increase unprofitable. The area in and around Madison and Fitchburg,
Wisconsin constitutes a relevant geographic market in which to assess
the competitive effects of this acquisition.
[[Page 96491]]
B. Preshow Services and Cinema Advertising in the United States
62. Preshow services sold to exhibitors and cinema advertising sold
to advertisers in the United States are relevant markets under Section
7 of the Clayton Act, 15 U.S.C. Sec. 18.
Preshow Services and Cinema Advertising Product Markets
i. Preshow Services
63. Preshow services consist of the packaging of advertisements and
content into a preshow delivered to exhibitors, enabling them to earn
revenue from the use of their screens before the feature film. The
price charged to exhibitors for preshow services is the portion of
advertising revenue retained by the network.
64. The sale of preshow services to exhibitors constitutes a
relevant product market and line of commerce under Section 7 of the
Clayton Act. There are no reasonable substitutes for preshow services.
Exhibitors cannot easily replace the preshow services that they buy
from cinema advertising networks because individual exhibitors
generally lack sufficient screens and geographic reach to secure
national advertising. Nor can exhibitors sufficiently replace national
advertising in preshows with local and regional advertising because
local and regional advertising generates far less revenue than national
advertising. Because there are no reasonable substitutes for preshow
services, a hypothetical monopolist of all such services could
profitably impose a SSNIP. Thus, the market for preshow services is a
relevant product market in which to assess the competitive effects of
this acquisition.
ii. Cinema Advertising
65. Cinema advertising is the on-screen advertising incorporated in
the preshow. The sale of cinema advertising to advertisers is a
relevant product market and line of commerce under Section 7 of the
Clayton Act. Cinema advertising has important attributes that
differentiate it from other forms of video advertising. For example,
the preshow is projected on a large screen with high-quality video and
sound in a darkened auditorium. In contrast to TV and other video
advertising platforms, the audience cannot avoid the advertisements by
fast forwarding through them, clicking past them, or changing a
channel. The preshow also allows for long-form advertisements typically
not available on TV, and it reaches a weekend audience and light TV
viewers who are otherwise difficult to reach.
66. Many advertisers value the combination of attributes afforded
by cinema advertising, and few would switch to other forms of video
advertising in response to a SSNIP of cinema advertising. A
hypothetical monopolist over all cinema advertising would profitably
impose a SSNIP and, thus, the market for cinema advertising is a
relevant product market in which to assess the competitive effects of
this acquisition.
Relevant Geographic Market for Preshow Services and Cinema Advertising
67. NCM and Screenvision compete with each other throughout the
United States. Exhibitors and advertisers in the United States would
not switch to cinema advertising networks located outside of the United
States in the event of a SSNIP in the United States. Accordingly, the
United States is a relevant geographic market for preshow services sold
to exhibitors and for cinema advertising sold to advertisers within the
meaning of Section 7 of the Clayton Act.
VI. COMPETITIVE EFFECTS
A. Exhibition of First-Run, Commercial Movies in the Local Markets
68. Exhibitors compete to attract moviegoers to their theatres over
the theatres of their rivals. They do that by competing on price,
knowing that if they charge too much (or do not offer sufficient
discounted tickets for matinees, seniors, students, or children)
moviegoers will begin to frequent their rivals' theatres. Exhibitors
also compete by seeking to license the first-run movies that are likely
to attract the largest numbers of moviegoers. In addition, exhibitors
compete over the quality of the viewing experience by offering
moviegoers the most sophisticated sound systems, largest screens, best
picture clarity, best seating (including stadium, reserved, and
recliner seating), and the broadest variety and highest quality snacks,
food, and drinks at concession stands or caf[eacute]s in the lobby or
served to moviegoers at their seats.
69. AMC and Carmike currently compete for moviegoers in the Local
Markets. These markets are highly concentrated, and in each market, AMC
and Carmike are significant competitors, given their close proximity.
Their rivalry spurs each to improve the quality of its theatres and
keeps ticket prices in check.
70. In each of the Local Markets, AMC's acquisition of Carmike will
lead to significant increases in concentration and eliminate existing
competition between AMC and Carmike.
71. Market concentration is often a useful indicator of the level
of competitive vigor in a market and the likely competitive effects of
a merger. The more concentrated a market, and the more a transaction
would increase that concentration, the more likely it is that the
transaction would result in reduced competition, harming consumers.
Market concentration commonly is measured by the Herfindahl-Hirschman
Index (``HHI''), as discussed in Appendix A. Markets in which the HHI
exceeds 2,500 points are considered highly concentrated, and
transactions that increase the HHI by more than 200 points in highly
concentrated markets are presumed likely to enhance market power.
72. All of the Local Markets are highly concentrated and will
experience significant HHI increases as a result of the transaction. In
each of the Local Markets, the proposed acquisition would give AMC
control of at least half, and sometimes all, of the first-run,
commercial movie theatre screens and between 48% and 100% of the annual
box office revenues. In each of the Local Markets, the acquisition
would yield post-acquisition HHIs of between 3,800 and 10,000,
representing increases in the range of 600 to 5,000 points.
73. Today, were one of Defendants' theatres to increase
unilaterally ticket prices in each of Local Markets, the exhibitor that
increased price would likely suffer financially as a substantial number
of its customers would patronize the other exhibitor. The acquisition
would eliminate this pricing constraint. Thus, the acquisition is
likely to lead to higher ticket prices for moviegoers, which could take
the form of a higher adult evening ticket price or reduced discounting
for matinees, children, seniors, or students.
74. The proposed acquisition likely would also reduce competition
between AMC and Carmike over the quality of the viewing experience at
the theatres in the Local Markets. If no longer motivated to compete,
AMC and Carmike would have reduced incentives to maintain, upgrade, and
renovate their theatres, to improve the theatres' amenities and
services, or to license the most popular movies, thus reducing the
quality of the viewing experience for moviegoers in the Local Markets.
75. For all of these reasons, AMC's acquisition of Carmike likely
will result in a substantial lessening of competition in each of the
Local Markets.
B. Preshow Services and Cinema Advertising in the United States
[[Page 96492]]
76. The proposed transaction also would likely substantially lessen
competition in the markets for the sale of preshow services to
exhibitors and the sale of cinema advertising to advertisers in the
United States.
AMC's Simultaneous Ownership of Equity Interests in NCM and
Screenvision Will Likely Substantially Lessen Competition
77. As a significant owner of equity interests in both NCM and
Screenvision post-merger, AMC would have an incentive to reduce the
head-to-head competition between NCM and Screenvision. AMC will not
benefit from strong competition between NCM and Screenvision post-
merger because the competition will lower the profits AMC earns from
NCM and Screenvision through its ownership interest.
78. In light of this incentive, AMC will likely use its influence
and governance rights in both companies to ensure that NCM and
Screenvision compete less aggressively to sign contracts with
exhibitors and advertisers at the expense of the other network. AMC
will also have the ability to use its access to confidential,
nonpublic, and trade secret information from NCM and Screenvision to
facilitate collusion by passing that competitively sensitive
information between NCM and Screenvision.
79. The lessening of competition between NCM and Screenvision will
likely result in lower payments to exhibitors and/or lower quality
preshows for exhibitors. Given that NCM and Screenvision control over
80% of screens in the United States, it would be difficult for
exhibitors to substitute to other, smaller networks.
80. Additionally, as a result of this lessening of competition,
advertisers will no longer benefit from the lower prices that have
resulted from the competition between NCM and Screenvision. Advertisers
do not have choices other than these two networks to reach a broad
number of viewers of their cinema advertising.
The Merger Will Likely Substantially Lessen Competition in Both Markets
Because It Will Likely Weaken Screenvision's Ability to Compete
81. The loss of an independent Carmike also likely would weaken
Screenvision's ability to remain a robust, competitive check on NCM,
the only other significant competitor in the preshow services and
cinema advertising markets. Scale is an important element of
competition for advertisers and, in turn, for exhibitors. Carmike is
Screenvision's largest exhibitor, and Screenvision touts the Carmike
theatre network's current, broad scale when competing to execute deals
with advertisers and exhibitors.
82. Screenvision also relies on Carmike's expansion plans to
maintain and possibly expand the scale of its network of screens. Under
Carmike's contract with Screenvision, all newly-acquired or -built
Carmike theatres that have a preshow are automatically assigned to the
Screenvision network. As a result, Carmike has fueled much of
Screenvision's growth in recent years through its acquisitions of
existing theatres and new theatre builds. This growth is important to
maintaining scale since exhibitors, including Carmike, periodically
close theaters that are no longer economically viable. Additionally,
Screenvision's scale is at risk as the industry consolidates and more
of the exhibitors with which it had previously contracted migrate to
the contracts between NCM and its Founding Members: AMC, Regal, and
Cinemark.
83. NCM's Founding Members and Carmike are the only exhibitors that
have made significant acquisitions as the exhibitor industry has been
consolidating. These exhibitors have long-term exclusive contracts with
either NCM or Screenvision. If AMC acquires Carmike, the AMC/NCM
exclusive arrangement will be expanded to Carmike and all of the merged
firm's future theatre acquisitions and new builds will affiliate with
NCM. Screenvision will lose access to its only substantial source of
theatre acquisitions and the number of independent exhibitors
unencumbered by long-term exclusive dealing arrangements for which
Screenvision can compete will shrink even more as industry
consolidation continues. Screenvision will only be able to rely on the
other, smaller exhibitors for theatre acquisitions or new builds to
maintain its network scale. These exhibitors will be unable to replace
the growth that Carmike would have likely provided in the absence of
the merger.
84. Competition will be lessened in the preshow services and cinema
advertising markets because the merger will weaken one of the only two
competitors. In the preshow services market, because NCM and
Screenvision closely monitor each other and battle for market share,
the competition between them provides tangible benefits for exhibitors
with respect to price and quality of preshows. The proposed merger
would likely substantially lessen the competition between NCM and
Screenvision that has yielded these benefits, potentially forcing
exhibitors to raise prices to consumers or forgo theatre improvements
to offset the resulting reduction in revenue that they earn from
preshows.
85. In the cinema advertising market, the resulting lessening of
competition from the proposed acquisition would negatively impact
advertisers, who pay NCM and Screenvision to place their ads in the
movie preshows. Currently, advertisers benefit from competition between
NCM and Screenvision for the placement of their ads. The proposed
merger would likely substantially lessen the competition between NCM
and Screenvision that has yielded these benefits, likely forcing
advertisers to pay higher prices or accept lower quality placement of
their advertising in the movie pre-shows.
VII. ENTRY
86. Sufficient, timely entry that would deter or counteract the
anticompetitive effects in the relevant markets alleged above is
unlikely. Exhibitors are reluctant to locate new, first-run, commercial
theatres near existing, first-run, commercial theatres unless the
population density, demographics, or the quality of existing theatres
makes new entry viable. Timely entry of new, first-run, commercial
movie theatres in the areas in and around the Local Markets would be
unlikely to defeat a price increase by the merged firm.
87. Additionally, the entry barriers associated with developing a
cinema advertising network are high, and thus new entry or expansion by
existing competitors is unlikely to prevent or remedy the proposed
merger's likely anticompetitive effects in the preshow services and
cinema advertising markets. Barriers to entry and expansion include the
time and cost of developing a network of screens to achieve sufficient
scale. NCM's and Screenvision's lock-up of almost all of the exhibitors
in the United States through staggered long-term contracts makes entry
a long process. This adds to the already high cost of building the
infrastructure necessary to develop and attract national advertisers.
It also increases the length of time an entrant must sustain losses
before its scale is large enough to sell advertising at long-term
profitable rates.
88. Exhibitors generally cannot supply preshow services themselves
to replace the likely substantial lessening of competition in the
preshow services market. Individual exhibitors or groups of small
exhibitors whose contracts with NCM or Screenvision are expiring are
unlikely to be able to establish cost-effective sales forces, attract
national advertisers, or otherwise develop a
[[Page 96493]]
sufficient infrastructure to reasonably replace lost competition.
VIII. VIOLATION ALLEGED
89. Plaintiff hereby reincorporates paragraphs 1 through 88.
90. The likely effect of AMC's proposed acquisition of Carmike
would be to substantially lessen competition in each of the relevant
markets identified above in violation of Section 7 of the Clayton Act,
15 U.S.C. 18.
91. Unless enjoined, the proposed transaction would likely have the
following effects, among others:
(a) the prices of tickets at first-run, commercial movie theatres
in the areas in and around the Local Markets would likely increase
above levels that would prevail absent the acquisition;
(b) the quality of first-run, commercial theatres and the viewing
experience at those theatres in the Local Markets would likely decrease
below levels that would prevail absent the acquisition;
(c) the quality of and revenues from preshow services provided to
exhibitors would likely decrease below levels that would prevail absent
the acquisition; and
(d) the cost to place ads in theatre preshows to advertisers will
likely increase to levels above, and the quality of advertising will
decrease to levels below, those that would prevail absent the
acquisition.
IX. REQUESTED RELIEF
92. Plaintiff requests that:
(a) AMC's proposed acquisition of Carmike be adjudged to violate
Section 7 of the Clayton Act, 15 U.S.C. 18;
(b) Defendants be permanently enjoined from and restrained from
carrying out the proposed acquisition or any other transaction that
would combine the two companies;
(c) Plaintiff be awarded its costs of this action; and
(d) Plaintiff be awarded such other reliefs as the Court may deem
just and proper.
Dated: 12/20/2016.
For Plaintiff United States of America
/s/ ________
Renata B. Hesse (D.C. Bar #466107),
Acting Assistant Attorney General.
/s/ ________
Jonathan B. Sallet,
Deputy Assistant Attorney General.
/s/ ________
Patricia A. Brink,
Director of Civil Enforcement.
/s/ ________
Owen M. Kendler,
Acting Chief, Litigation III.
Yvette F. Tarlov,
Lisa A. Scanlon,
Assistant Chiefs, Litigation III.
/s/ ________
Gregg I. Malawer (D.C. Bar #481685)
Miriam R. Vishio (D.C. Bar #482282)
Mona S.K. Haar (D.C. Bar #98789)
Justin M. Dempsey (D.C. Bar #425976),
Trial Attorneys, Litigation III.
U.S. Department of Justice, Antitrust Division, 450 5th Street NW.,
Suite 4000, Washington, DC 20530, Fax: (202) 514-7308, Telephone:
Gregg Malawer (202) 616-5943, E-mail: gregg.malawer@usdoj.gov,
Telephone: Miriam Vishio (202) 598-8091, E-mail:
miriam.vishio@usdoj.gov.
APPENDIX A
Herfindahl-Hirschman Index
The term ``HHI'' means the Herfindahl-Hirschman Index, a
commonly accepted measure of market concentration. The HHI is
calculated by squaring the market share of each firm competing in
the relevant market and then summing the resulting numbers. For
example, for a market consisting of four firms with shares of 30,
30, 20, and 20 percent, the HHI is 2,600 (302 + 302 + 202 + 202 =
2,600). The HHI takes into account the relative size distribution of
the firms in a market. It approaches zero when a market is occupied
by a large number of firms of relatively equal size, and reaches its
maximum of 10,000 points when a market is controlled by a single
firm. The HHI increases both as the number of firms in the market
decreases and as the disparity in size between those firms
increases.
Markets in which the HHI is between 1,500 and 2,500 points are
considered to be moderately concentrated, and markets in which the
HHI is in excess of 2,500 points are considered to be highly
concentrated. See U.S. Department of Justice & Federal Trade
Commission, Horizontal Merger Guidelines Sec. 5.3 (2010)
(``Guidelines''). Transactions that increase the HHI by more than
200 points in highly concentrated markets presumptively raise
antitrust concerns under the Guidelines. Id.
United States District Court for the District of Columbia
United States of America Plaintiff, v. AMC Entertainment Holdings,
Inc., and Carmike Cinemas, Inc., Defendants.
Case No.: 1:16-cv-02475
Judge: Randolph D. Moss
Filed: 12/20/2016
COMPETITIVE IMPACT STATEMENT
Plaintiff, United States of America, pursuant to Section 2(b) of
the Antitrust Procedures and Penalties Act (``APPA'' or ``Tunney
Act''), 15 U.S.C. Sec. 16(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment submitted for entry
in this civil antitrust proceeding.
I. NATURE AND PURPOSE OF PROCEEDING
On March 3, 2016, Defendant AMC Entertainment Holdings, Inc.
(``AMC'') agreed to acquire all of the outstanding voting securities of
Defendant Carmike Cinemas, Inc. (``Carmike''). AMC and Carmike are the
second-largest and fourth-largest movie theatre circuits, respectively,
in the United States.
AMC owns significant equity in National CineMedia, LLC (``NCM'')
and Carmike owns significant equity in SV Holdco, LLC, a holding
company that owns and operates Screenvision Exhibition, Inc.
(collectively ``Screenvision''). NCM and Screenvision are the country's
two main, preshow cinema advertising networks, covering over 80% of
movie theatre screens in the United States.
The United States filed a civil antitrust complaint on December 20,
2016, seeking to enjoin the proposed acquisition and to obtain
equitable relief. The Complaint alleges that the acquisition, if
permitted to proceed, would give AMC direct control of one of its most
significant movie theatre competitors, and in some cases, its only
competitor, in 15 local markets (identified as the ``Local Markets'' in
the Complaint) \1\ in nine states. Moviegoers would likely experience
higher ticket and concession prices and lower quality services in these
local markets as a consequence.
---------------------------------------------------------------------------
\1\ As alleged in the Complaint, the 15 Local Markets are
Montgomery, Alabama; Destin and Miramar Beach, Florida; Orange Park
and Fleming Island, Florida; Cumming, Georgia; Lithonia and Conyers,
Georgia; Crestwood and Lansing, Illinois; Normal and Bloomington,
Illinois; Pekin, Peoria, and Washington, Illinois; Inver Grove
Heights and Oakdale, Minnesota; Coon Rapids and Mounds View,
Minnesota; Rockaway and Sparta, New Jersey; Westfield and Cranford,
New Jersey; Lawton, Oklahoma; Allentown and Center Valley,
Pennsylvania; and Madison and Fitchburg, Wisconsin.
---------------------------------------------------------------------------
The Complaint further alleges that because AMC will hold sizable
interests in both NCM and Screenvision post-transaction, and
Screenvision will lose Carmike as a source of future growth of its
network, the acquisition would substantially lessen competition in the
markets for preshow services and cinema advertising. This loss of
competition likely would result in increased prices and reduced
services for advertisers and theatre exhibitors seeking preshow
services.
The likely effect of AMC's acquisition of Carmike will be to
substantially lessen competition in the exhibition of first-run,
commercial movies in the 15 Local Markets, and in the sale of preshow
services and cinema advertising on a nationwide basis, in violation of
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18.
At the same time the Complaint was filed, the United States also
filed a Hold Separate Stipulation and Order (``Hold
[[Page 96494]]
Separate'') and a proposed Final Judgment. Under the terms of the
proposed Final Judgment, which is explained more fully below, AMC is
required to take certain actions that are designed to eliminate the
anticompetitive effects that are likely to result from AMC's
acquisition of Carmike. Specifically, the Defendants are required to:
(1) Divest movie theatres in the 15 Local Markets where it and Carmike
are direct competitors; (2) sell down its equity interest in NCM such
that it owns no more than 4.99%; (3) relinquish its seats on NCM's
Board of Directors and all other governance rights it holds in NCM, (4)
transfer 24 theaters with a total of 384 screens to the Screenvision
cinema advertising network and divest any of those theatres it does not
successfully transfer; and (5) implement and maintain ``firewalls'' to
further ensure that it does not obtain NCM's, Screenvision's, or other
exhibitors' competitively sensitive information or become a conduit for
the flow of such information between NCM and Screenvision.
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION
A. Defendants and the Proposed Transaction
Defendant AMC is a Delaware corporation with its headquarters in
Leawood, Kansas. As of September 30, 2016, AMC operated approximately
388 theatres with a total of 5,295 screens located across 31 states and
the District of Columbia. AMC reported approximately $1.89 billion in
U.S. box office revenues in 2015 and approximately $1.46 billion in
U.S. box office revenues for the first nine months of 2016. Measured by
number of theatres, screens, and box office revenue, AMC is the second-
largest theatre circuit in the United States.
AMC is one of the three founders of the NCM cinema advertising
network, owns 17.4% of NCM, controls two seats on NCM's Board of
Directors, and has certain governance rights over NCM. AMC's ownership
interest in NCM will increase to 26.5% after it acquires Carmike.
Defendant Carmike is a Delaware corporation with its headquarters
in Columbus, Georgia. As of September 30, 2016, Carmike operated
approximately 271 movie theatres with a total of 2,917 screens located
across 41 states. Carmike reported approximately $490.0 million in U.S.
box office revenues in 2015, and approximately $370.8 million in U.S.
box office revenue for the first nine months of 2016. Measured by
number of theatres, screens, and box office revenue, Carmike is the
fourth-largest theatre circuit in the United States.
Carmike is the largest theatre circuit in the Screenvision cinema
advertising network. It also owns approximately 19% of Screenvision,
controls a seat on Screenvision's Board of Directors, and has certain
governance rights over Screenvision.
B. The Competitive Effects of the Transaction on the Exhibition of
First-Run, Commercial Movies
1. The Relevant Markets
As alleged in the Complaint, movies are a unique form of
entertainment. The experience of viewing a movie in a theatre is an
inherently different experience from live entertainment (e.g., a stage
production or attending a sporting event) or viewing a movie in the
home (e.g., through streaming video, on a DVD, or via pay-per-view).
Reflecting the significant differences of viewing a movie in a
theatre, ticket prices for movies generally differ from prices for
other forms of entertainment. For example, typically, tickets for live
entertainment are significantly more expensive than a movie ticket,
whereas the costs of home viewing through streaming video, a DVD
rental, or pay-per-view is usually significantly less expensive than
viewing a movie in a theatre.
Viewing a movie at home differs from viewing a movie in a theatre
in many ways. For example, the size of the screens and sophistication
of the sound systems differ, and, unlike at home, in the theatre, one
has the social experience of viewing a movie with other patrons.
In addition, the most popular newly released or ``first-run''
movies are not available for home viewing at the time they are released
in theatres. Movies are considered to be in their ``first-run'' during
the four to five weeks following initial release in a given locality.
If successful, a movie may be exhibited at other theatres after the
first-run as part of a second or subsequent run (often called a ``sub-
run'' or ``second-run'').
Moviegoers generally do not regard sub-run movies as an adequate
substitute for first-run movies. Reflecting the significant difference
between viewing a newly released, first-run movie and an older sub-run
movie, tickets at theatres exhibiting first-run movies usually cost
significantly more than tickets at sub-run theatres.
Art movies and foreign-language movies are also not reasonable
substitutes for commercial, first-run movies. Art movies, which include
documentaries, are sometimes referred to as independent films. Although
art and foreign-language movies appeal to some viewers of commercial
movies, art and foreign-language movies tend to have more narrow appeal
and typically attract an older audience than commercial movies.
Exhibitors consider the operation of theatres that predominantly
exhibit art and foreign-language movies to be distinct from the
operation of theatres that predominantly exhibit commercial movies.
For all of these reasons, the Complaint alleges that a hypothetical
monopolist controlling the exhibition of all first-run, commercial
movies in a relevant geographic market would profitably impose at least
a small but significant and non-transitory increase (``SSNIP'') in
ticket prices. Thus, the exhibition of first-run, commercial movies is
a relevant product market and line of commerce under Section 7 of the
Clayton Act in which to assess the competitive effects of this
acquisition.
Moviegoers typically are not willing to travel very far from their
home to attend a movie. As a result, geographic markets for the
exhibition of first-run, commercial movies are relatively local. As
detailed in the Complaint, there are 15 Local Markets in which AMC and
Carmike compete today and each is a relevant geographic market in a
section of the country for purposes of Section 7 of the Clayton Act.
2. Competitive Effects
Exhibitors compete to attract moviegoers to their theatres over the
theatres of their rivals. They do that by competing on price, knowing
that if they charge too much (or do not offer sufficient discounted
tickets for matinees, seniors, students, or children) moviegoers will
begin to frequent their rivals. Exhibitors also compete by seeking to
license the first-run movies that are likely to attract the largest
numbers of moviegoers. In addition, exhibitors compete over the quality
of the viewing experience by offering moviegoers the most sophisticated
sound systems, largest screens, best picture clarity, best seating
(including stadium, reserved, and recliner seating), and the broadest
variety and highest
[[Page 96495]]
quality of snacks, food, and drinks at concession stands or
caf[eacute]s in the lobby or served to moviegoers at their seats.
AMC and Carmike currently compete for moviegoers in the Local
Markets. As detailed in the Complaint, all 15 Local Markets are highly
concentrated, and will experience significant additional increases in
concentration as a result of the transaction. In each of the Local
Markets, the proposed acquisition would give AMC control of a majority,
or all, of the first-run, commercial movie theatres and between 48% and
100% of the annual box office revenues. The transaction will also
eliminate substantial head-to-head competition between AMC and Carmike
that has provided consumers with lower prices and a higher quality
movie-going experience.
3. Entry and Expansion
Sufficient, timely entry that would deter or counteract the
anticompetitive effects in the Local Markets is unlikely. Exhibitors
are reluctant to locate new, first-run, commercial theatres near
existing, first-run, commercial theatres unless the population density,
demographics, or quality of existing theatres makes new entry viable.
Timely entry of new, first-run, commercial movie theatres in the areas
in and around the Local Markets would be unlikely to defeat a price
increase by the merged firm.
C. The Competitive Effects of the Transaction on the Preshow Services
and Cinema Advertising Markets
1. Relevant Markets
As alleged in the Complaint, both preshow services sold to
exhibitors and cinema advertising sold to advertisers in the United
States are relevant markets under Section 7 of the Clayton Act, 15
U.S.C. Sec. 18.
Preshow services consist of the packaging of advertisements and
content into a preshow delivered to exhibitors, enabling them to earn
revenue from the use of their screens before the feature film. The
price charged to exhibitors for preshow services is the portion of
advertising revenue retained by the network.
The sale of preshow services to exhibitors constitutes a relevant
product market and line of commerce under Section 7 of the Clayton Act.
There are no reasonable substitutes for preshow services. Exhibitors
cannot easily replace the preshow services that they buy from cinema
advertising networks because individual exhibitors generally lack
sufficient screens and geographic reach to secure national advertising.
Nor can exhibitors sufficiently replace national advertising in
preshows with local and regional advertising because local and regional
advertising generates far less revenue than national advertising.
Because there are no reasonable substitutes for preshow services, a
hypothetical monopolist of all such services could profitably impose a
SSNIP. Thus, the Complaint alleges that the market for preshow services
is a relevant product market in which to assess the competitive effects
of the acquisition.
Cinema advertising is the on-screen advertising incorporated in the
preshow. The Complaint alleges that the sale of cinema advertising to
advertisers is a relevant product market and line of commerce under
Section 7 of the Clayton Act. Cinema advertising has important
attributes that differentiate it from other forms of video advertising.
For example, the preshow is projected on a large screen with high-
quality video and sound in a darkened auditorium. In contrast to TV and
other video advertising platforms, the audience cannot avoid the
advertisements by fast forwarding through them, clicking past them, or
changing a channel. The preshow also allows for long-form
advertisements typically not available on TV, and it reaches a weekend
audience and light TV viewers who are otherwise difficult to reach.
NCM and Screenvision compete with each other throughout the United
States. Exhibitors and advertisers in the United States would not
switch to cinema advertising networks located outside of the United
States in the event of a SSNIP in the United States. Accordingly, the
Complaint alleges that United States is a relevant geographic market
and section of the country for preshow services sold to exhibitors and
for cinema advertising sold to advertisers within the meaning of
Section 7 of the Clayton Act.
2. Competitive Effects
As a significant owner of equity interests in both NCM and
Screenvision post-merger, AMC would have an incentive to reduce the
head-to-head competition between NCM and Screenvision. AMC will likely
use its influence and governance rights in both companies to ensure
that NCM and Screenvision compete less aggressively to sign contracts
with exhibitors and advertisers at the expense of the other network.
AMC will also have the ability to use its access to confidential,
nonpublic, and trade secret information of NCM and Screenvision to
reduce competition by passing that competitively sensitive information
between the companies.
The lessening of competition between NCM and Screenvision will
likely result in lower payments and/or lower quality preshows for
exhibitors. Additionally, advertisers will no longer benefit from the
lower prices that have resulted from the competition between NCM and
Screenvision. Advertisers do not have choices other than these two
networks to reach a broad number of viewers of their cinema
advertising.
As further alleged in the Complaint, the loss of an independent
Carmike also likely would weaken Screenvision's ability to remain a
robust competitive check on NCM, the only other significant competitor
in the preshow services and cinema advertising markets. In 2014, the
United States filed a civil antitrust lawsuit to block NCM's
acquisition of Screenvision and preserve the intense competition
between the companies. NCM and Screenvision subsequently abandoned
their merger in early 2015. As was the case in 2014, Carmike remains
Screenvision's largest exhibitor, and Screenvision touts the Carmike
theatre network's current, broad scale when competing to execute deals
with advertisers and exhibitors. The merger, however, will extend AMC's
exclusive contract with NCM to include any new theatres that Carmike
would have opened or acquired. This shift from Screenvision to NCM will
likely weaken Screenvision's ability to compete because: (1) It will be
unable to rely on Carmike's growth to increase its network's scale; and
(2) the number of independent theatre exhibitors unencumbered by an
exclusive preshow agreement with NCM will shrink as exhibitor
consolidation continues. For all of these reasons, the Complaint
alleges that the merger is likely to substantially lessen competition
in the preshow services and cinema advertising markets.
3. Entry and Expansion
According to the Complaint, the entry barriers associated with
developing a cinema advertising network are high, and thus new entry or
expansion by existing competitors is unlikely to prevent or remedy the
proposed merger's likely anticompetitive effects in the preshow
services and cinema advertising markets. Barriers to entry and
expansion include the time and cost of developing a network of screens
to achieve sufficient scale. NCM's and Screenvision's lock-up of almost
all of the exhibitors in the United States through staggered long-term
contracts makes entry a long process. This adds
[[Page 96496]]
to the already high cost of building the infrastructure necessary to
develop and attract national advertisers. It also increases the length
of time an entrant must sustain losses before its scale is large enough
to sell advertising at long-term profitable rates.
Exhibitors generally cannot supply preshow services themselves to
replace the substantial lessening of competition in the preshow
services market. Individual exhibitors or groups of small exhibitors
whose contracts with NCM or Screenvision are expiring are unlikely to
be able to establish cost-effective sales forces, attract national
advertisers, or otherwise develop a sufficient infrastructure to
reasonably replace lost competition.
III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT
The movie theatre divestiture requirement of the proposed Final
Judgment will eliminate the anticompetitive effects of AMC's
acquisition of Carmike in each of the 15 Local Markets for the
exhibition of first-run, commercial movies by establishing new,
independent, and economically-viable competitors. The other
requirements of the proposed Final Judgment will eliminate the
anticompetitive effects of the acquisition on the preshow services and
cinema advertising markets by requiring AMC to divest most of its
ownership interest in NCM, relinquish its NCM Board seats and all
governance rights, transfer 24 AMC theatres with a total of 384 screens
to the Screenvision network, and implement firewalls to prevent the
misuse of competitively sensitive information.
A. Theatre Exhibition of First-Run, Commercial Movies
Section IV.A of the proposed Final Judgment requires Defendants
within sixty calendar days after the filing of the Complaint, or five
calendar days after the Court's entry of Final Judgment, whichever is
later, to divest as viable, ongoing businesses the theatres identified
on the ``Initial Theatre Divestiture Assets'' list in Appendix A to the
proposed Final Judgment to one or more acquirers acceptable to the
United States in its sole discretion. This will require Defendants to
divest a minimum of 15 theatres covering each of the Local Markets.
The theatres must be divested in such a way as to satisfy the
United States that they can and will be operated by the purchaser as
viable, ongoing businesses that can compete effectively as first-run,
commercial theatres. To that end, the proposed Final Judgment provides
the acquirer(s) of the theatres with an option to enter into a
transitional agreement with Defendants of up to 120 days in length,
with the possibility of one or more extensions not to exceed six months
in total, for the supply of any goods, services, support, including
software service and support, and reasonable use of the name AMC, the
name Carmike, and any registered service marks of AMC or Carmike, for
use in operating those theatres during the period of transition. The
availability of a transitional agreement will ensure that the
acquirer(s) of the theatres can operate without interruption while
long-term supply agreements are arranged and the theatres rebranded.
In the event that Defendants do not accomplish the theatre
divestitures within the periods prescribed in the proposed Final
Judgment, Section VI of the proposed Final Judgment provides that the
Court will appoint a Divestiture Trustee selected by the United States
to effectuate the theatre divestitures required by the Final Judgment.
If Defendants are unable to effectuate any of the divestitures due
to their inability to obtain the consent of the landlord from whom a
theatre is leased, Section IV.K of the proposed Final Judgment requires
them to divest alternative theatre assets that compete effectively with
the theatres for which the landlord consent was not obtained. This
provision will ensure that any failure by Defendants to obtain landlord
consent does not thwart the relief obtained in the proposed Final
Judgment.
The theatre divestiture provisions of the proposed Final Judgment
will eliminate the anticompetitive effects of AMC's acquisition of
Carmike in the exhibition of first-run, commercial movies in the Local
Markets.
In addition to the proposed Final Judgment's provisions, the Hold
Separate provides that, until the divestitures take place, AMC and
Carmike must maintain the sales and marketing of the theatres, and
maintain the theatres in operable condition at current capacity
configurations. In addition, AMC and Carmike must not transfer or
reassign to other areas within the company their employees with primary
responsibility for the operation of the theatres, except for transfer
bids initiated by employees pursuant to Defendants' regular,
established job-posting policies.
B. Preshow Services and Cinema Advertising
The proposed Final Judgment will remedy the anticompetitive effects
of the proposed transaction in the markets for preshow services and
cinema advertising in two principal ways.
First, the proposed Final Judgment will significantly reduce AMC's
incentive and ability to weaken head-to-head competition between NCM
and Screenvision following the merger. In the absence of relief, AMC's
significant equity holdings in both NCM and Screenvision would give AMC
the incentive post-merger to use its governance rights to soften each
company's competitive actions towards the other and use its access to
each company's competitively sensitive information to help the
companies coordinate their actions. The proposed Final Judgment
significantly reduces AMC's incentives to lessen competition or favor
NCM over Screenvision by requiring AMC to sell down its NCM equity
holdings to a level of no more than 4.99%. Pursuant to NCM's governing
documents, AMC would lose its right to seats on NCM's board of
directors. Because the divestiture will leave AMC with a relatively
small stake in NCM--both in terms of its proportion of the whole and
total value--it would no longer earn significant profits from a
lessening of competition between NCM and Screenvision. Moreover, the
NCM profits to be earned from any action AMC were to take to lessen
such competition would largely accrue to its theatre exhibitor rivals
Regal and Cinemark, an unappealing outcome to AMC.
To further reduce AMC's ability to lessen head-to-head competition
between NCM and Screenvision, Section X.A of the proposed Final
Judgment prohibits AMC from holding NCM board seats or otherwise
exercising any governance rights in NCM. In addition, Section X.B of
the proposed Final Judgment prohibits AMC from, among other activities,
attending NCM board meetings, receiving nonpublic information from NCM,
or proposing NCM make future acquisitions. These provisions, along with
the loss of AMC's rights to participate in NCM's business as a result
of the sell down of AMC's equity interest below 5%, will render AMC
unable to direct or influence NCM to soften its competitive actions
towards Screenvision.
In order to further ensure that AMC cannot use its position as an
owner and major customer of NCM and Screenvision to obtain
competitively sensitive information that could be used to facilitate
improper coordination or otherwise cause competitive harm, Section XII
of the proposed Final Judgment requires AMC to institute firewalls to
prevent AMC from obtaining
[[Page 96497]]
competitively sensitive information from either NCM or Screenvision,
passing competitively sensitive information between NCM and
Screenvision, or obtaining from NCM or Screenvision competitively
sensitive information about any of NCM or Screenvision's other
exhibitor customers.
Second, the proposed Final Judgment seeks to ensure that
Screenvision will remain a strong competitor to NCM in the preshow
services and cinema advertising markets. As alleged in the Complaint,
Screenvision is NCM's only significant competitor in these markets, and
Carmike is Screenvision's largest theatre exhibitor. While Carmike's
legacy theatres will remain in Screenvision's network for the remainder
of the Carmike/Screenvision contract, the merger will deprive
Screenvision of Carmike's expected growth through future acquisitions
and new theatre builds. To offset this loss of future Carmike growth,
Section XI.A of the proposed Final Judgment requires the Defendants to
transfer the 24 theatres identified in Appendix B to the proposed Final
Judgment, comprising a total of 384 screens, to Screenvision for the
term of the Final Judgment and to stop utilizing NCM preshow and
theatre advertising services at these theatres. If the Defendants fail
to effectuate the Screenvision transfer at any of the 24 theatres
within the time period set forth in Section XI.A, Section XI.B requires
AMC to divest such theatres pursuant to the procedures set forth in
Section IV.B of the proposed Final Judgment. In addition to the screen
transfer, Screenvision will also benefit from AMC's plans to remodel a
significant number of Carmike theatres, which will likely increase
audience attendance at those theatres. Taken together, Screenvision
will obtain through the screen transfers and theatre remodeling the
credibility and additional scale--both in terms of geographic coverage
and increased audiences--to compete effectively for advertisers and
exhibitors against NCM.
In addition, the proposed Final Judgment requires AMC to designate
a Compliance Officer who will supervise the AMC's compliance with the
Final Judgment, distributing the Final Judgment to the company's
personnel, and reporting decree violations, including violations of the
firewall provisions, to the United States.
IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against Defendants.
V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register, or the last date of
publication in a newspaper of the summary of this Competitive Impact
Statement, whichever is later. All comments received during this period
will be considered by the United States Department of Justice, which
remains free to withdraw its consent to the proposed Final Judgment at
any time prior to the Court's entry of judgment. The comments and the
response of the United States will be filed with the Court. In
addition, comments will be posted on the U.S. Department of Justice,
Antitrust Division's internet website and, under certain circumstances,
published in the Federal Register.
Written comments should be submitted to: Owen M. Kendler, Acting
Chief, Litigation III, Antitrust Division, United States Department of
Justice, 450 5th Street NW., Suite 4000, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against Defendants.
Plaintiff could have continued the litigation and sought preliminary
and permanent injunctions against AMC's acquisition of Carmike.
Plaintiff is satisfied, however, that the divestiture of assets and
other relief described in the proposed Final Judgment will preserve
competition for the exhibition of first-run, commercial movies in the
Local Markets, as well as preserve competition in preshow services and
cinema advertising. Thus, the proposed Final Judgment would achieve all
or substantially all of the relief that the United States would have
obtained through litigation, but avoids the time, expense, and
uncertainty of a full trial on the merits of the Complaint.
VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty-day comment
period, after which the court shall determine whether entry of the
proposed Final Judgment is ``in the public interest.'' 15 U.S.C.
16(e)(1). In making that determination, the court, in accordance with
the statute as amended in 2004, is required to consider:
(A) the competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative
remedies actually considered, whether its terms are ambiguous, and
any other competitive considerations bearing upon the adequacy of
such judgment that the court deems necessary to a determination of
whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
Id. at Sec. 16(e)(1)(A) & (B). In considering these statutory
factors, the court's inquiry is necessarily a limited one as the
government is entitled to ``broad discretion to settle with the
defendant within the reaches of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007)
(assessing public interest standard under the Tunney Act); United
States v. US
[[Page 96498]]
Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (noting that
the court's ``inquiry is limited'' because the government has ``broad
discretion'' to determine the adequacy of the relief secured through a
settlement); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2
Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C.
Aug. 11, 2009) (noting that the court's review of a consent judgment is
limited and only inquires ``into whether the government's determination
that the proposed remedies will cure the antitrust violations alleged
in the complaint was reasonable, and whether the mechanism to enforce
the final judgment are clear and manageable.'').\2\
---------------------------------------------------------------------------
\2\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
As the United States Court of Appeals for the District of Columbia
Circuit has held, a court conducting inquiry under the APPA may
consider, among other things, the relationship between the remedy
secured and the specific allegations set forth in the government's
complaint, whether the decree is sufficiently clear, whether
enforcement mechanisms are sufficient, and whether the decree may
positively harm third parties. See Microsoft, 56 F.3d at 1458-62. With
respect to the adequacy of the relief secured by the decree, a court
may not ``engage in an unrestricted evaluation of what relief would
best serve the public.'' United States v. BNS, Inc., 858 F.2d 456, 462
(9th Cir. 1988) (quoting United States v. Bechtel Corp., 648 F.2d 660,
666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62; United
States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev,
2009 U.S. Dist. LEXIS 84787, at *3. Courts have held that:
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\3\
In determining whether a proposed settlement is in the public interest,
a district court ``must accord deference to the government's
predictions about the efficacy of its remedies, and may not require
that the remedies perfectly match the alleged violations.'' SBC
Commc'ns, 489 F. Supp. 2d at 17; see also US Airways, 8 F. Supp. 3d at
75 (noting that a court should not reject the proposed remedies because
it believes others are preferable); Microsoft, 56 F.3d at 1461 (noting
the need for courts to be ``deferential to the government's predictions
as to the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that
the court should grant due respect to the government's prediction as to
the effect of proposed remedies, its perception of the market
structure, and its views of the nature of the case).
---------------------------------------------------------------------------
\3\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass''). See generally Microsoft, 56 F.3d at 1461
(discussing whether ``the remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest' '').
---------------------------------------------------------------------------
Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[A] proposed decree must be approved
even if it falls short of the remedy the court would impose on its own,
as long as it falls within the range of acceptability or is `within the
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co.,
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also US
Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the
government to grant concessions in the negotiation process for
settlements (citing Microsoft, 56 F.3d at 1461)); United States v.
Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving
the consent decree even though the court would have imposed a greater
remedy). To meet this standard, the United States ``need only provide a
factual basis for concluding that the settlements are reasonably
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp.
2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also US Airways,
38 F. Supp 3d at 75 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (concluding
that ``the `public interest' is not to be measured by comparing the
violations alleged in the complaint against those the court believes
could have, or even should have, been alleged''). Because the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that ``the court is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States did not pursue.
Microsoft, 56 F.3d at 1459-60. As this Court confirmed in SBC
Communications, courts ``cannot look beyond the complaint in making the
public interest determination unless the complaint is drafted so
narrowly as to make a mockery of judicial power.'' 489 F. Supp. 2d at
15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction that ``[n]othing in
this section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. 16(e)(2); see also US Airways, 38 F. Supp. 3d at
76 (indicating that a court is not required to hold an evidentiary
hearing or to permit intervenors as part of its review under the Tunney
Act). This language codified what Congress intended when it enacted the
Tunney Act in 1974, as the author of this legislation, Senator Tunney
explained: ``The court is nowhere compelled to go to trial or to engage
in extended proceedings which might have the effect of vitiating the
benefits of prompt and less costly settlement through the consent
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Sen.
Tunney). Rather, the procedure for the public interest determination is
left to the discretion of the court, with the recognition that the
court's ``scope of review remains sharply proscribed by precedent and
the nature of Tunney Act proceedings.''
[[Page 96499]]
SBC Commc'ns, 489 F. Supp. 2d at 11.\4\ A court can make its public
interest determination based on the competitive impact statement and
response to public comments alone. US Airways, 38 F. Supp. 3d at 76.
---------------------------------------------------------------------------
\4\ See also United States v. Enova Corp., 107 F. Supp. 2d 10,
17 (D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone'');
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent
a showing of corrupt failure of the government to discharge its
duty, the Court, in making its public interest finding, should . . .
carefully consider the explanations of the government in the
competitive impact statement and its responses to comments in order
to determine whether those explanations are reasonable under the
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the
public interest can be meaningfully evaluated simply on the basis of
briefs and oral arguments, that is the approach that should be
utilized.'').
---------------------------------------------------------------------------
VIII. DETERMINATIVE DOCUMENTS
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: December 20, 2016
Respectfully submitted,
/s/--------------------------------------------------------------------
Gregg I. Malawer (D.C. Bar #481685),
U.S. Department of Justice, Antitrust Division, 450 5th Street NW.,
Suite 4000, Washington, DC 20530, Phone: Gregg Malawer (202) 616-
5943, Phone: Miriam Vishio (202) 598-8091, Fax: (202) 514-7308,
Email: gregg.malawer@usdoj.gov.
Attorney for the United States.
United States District Court for the District of Columbia
United States of America, Plaintiff, v. AMC Entertainment
Holdings, Inc., and Carmike Cinemas, Inc., Defendants.
Case No.: 1:16-cv-02475
Judge: Randolph D. Moss
Filed: 12/20/2016
[PROPOSED] FINAL JUDGMENT
WHEREAS, Plaintiff United States of America filed its Complaint on
December 20, 2016 the United States and Defendants, AMC Entertainment
Holdings, Inc. (``AMC'') and Carmike Cinemas, Inc. (``Carmike''), by
their respective attorneys, have consented to the entry of this Final
Judgment without trial or adjudication of any issue of fact or law, and
without this Final Judgment constituting any evidence against or
admission by any party regarding any issue of fact or law;
AND WHEREAS, Defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
AND WHEREAS, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by the Defendants to
assure that competition is not substantially lessened;
AND WHEREAS, Plaintiff requires Defendants to make certain
divestitures, undertake certain actions, and refrain from certain
conduct for the purpose of remedying the loss of competition alleged in
the Complaint;
AND WHEREAS, Defendants have represented to Plaintiff that the
divestitures required below can and will be made and the actions and
conduct restrictions can and will be undertaken, and that Defendants
will later raise no claim of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture and other remedy
provisions contained below;
NOW THEREFORE, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ORDERED, ADJUDGED AND DECREED:
I. JURISDICTION
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against Defendants under Section 7 of the Clayton
Act, as amended, 15 U.S.C. Sec. 18.
II. DEFINITIONS
As used in this Final Judgment:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities to
which Defendants divest the Theatre Divestiture Assets.
B. ``AMC'' means AMC Entertainment Holdings, Inc., a Delaware
corporation with its headquarters in Leawood, Kansas, its successors
and assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
C. ``Carmike'' means Carmike Cinemas, Inc., a Delaware corporation
with its headquarters in Columbus, Georgia, its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships and
joint ventures, and their directors, officers, managers, agents, and
employees.
D. ``NCM Divestiture Assets'' means that portion of Defendants' NCM
Holdings required to be divested under this Final Judgment.
E. ``Initial Theatre Divestiture Assets'' means the theatre assets
listed in Appendix A. The term ``Initial Theatre Divestiture Assets''
includes:
1. All tangible assets that comprise the business of operating
theatres that exhibit movies, including, but not limited to, real
property and improvements, research and development activities, all
equipment, fixed assets, and fixtures, personal property, inventory,
office furniture, materials, supplies, and other tangible property and
all assets used in connection with the Initial Theatre Divestiture
Assets; all licenses, permits, and authorizations issued by any
governmental organization relating to the Initial Theatre Divestiture
Assets; all contracts (including management contracts), teaming
arrangements, agreements, leases, commitments, certifications, and
understandings relating to the Initial Theatre Divestiture Assets,
including supply agreements (provided however, that supply agreements
that apply to all of each Defendant's theatres may be excluded from the
Initial Theatre Divestiture Assets, subject to the transitional
agreement provisions specified in Section IV(F)); all customer lists
(including rewards and loyalty club data at the option of the
Acquirer(s), copies of which may be retained by Defendants at their
option), contracts, accounts, and credit records relating to the
Initial Theatre Divestiture Assets; all repair and performance records
and all other records relating to the Initial Theatre Divestiture
Assets; and
2. All intangible assets relating to the operation of the Initial
Theatre Divestiture Assets, including, but not limited, to all patents,
licenses and sublicenses, intellectual property, copyrights,
trademarks, trade names, service marks, service names, (provided,
however, that the names Carmike, AMC, and any registered service marks
of Carmike or AMC may be excluded from the Initial Theatre Divestiture
Assets, subject to the transitional agreement provisions specified in
Section IV(F)), technical information, computer software and related
documentation (provided, however, that Defendants' proprietary software
may be excluded from the Initial Theatre Divestiture Assets, subject to
the transitional agreement provisions specified in Section IV(F)),
know-how and trade secrets, drawings, blueprints, designs, design
protocols, specifications for materials, specifications for parts and
devices, safety procedures for the handling of materials and
substances, all research data concerning historic and current research
and development, quality assurance and control procedures, design tools
and simulation capability, all manuals and technical information
Carmike or AMC provide to their own employees, customers,
[[Page 96500]]
suppliers, agents, or licensees (except for the employee manuals that
Carmike or AMC provide to all its employees), and all research data
concerning historic and current research and development.
F. ``Screen Transfer Theatres'' means the theatres listed in
Appendix B.
G. ``Screen Transfer Divestiture Assets'' means any Screen Transfer
Theatres that Defendants must divest pursuant to Section XI(B) of this
Final Judgment due to Defendants' failure to fully effect the screen
transfers required by Section XI(A). The term ``Screen Transfer
Divestiture Assets'' also includes for any such Screen Transfer
Theatre:
1. All tangible assets that comprise the business of operating
theatres that exhibit movies, including, but not limited to, real
property and improvements, research and development activities, all
equipment, fixed assets, and fixtures, personal property, inventory,
office furniture, materials, supplies, and other tangible property and
all assets used in connection with the Screen Transfer Divestiture
Assets; all licenses, permits, and authorizations issued by any
governmental organization relating to the Screen Transfer Divestiture
Assets; all contracts (including management contracts), teaming
arrangements, agreements, leases, commitments, certifications, and
understandings relating to the Screen Transfer Divestiture Assets,
including supply agreements (provided, however, that supply agreements
that apply to all of each Defendant's theatres may be excluded from the
Screen Transfer Divestiture Assets, subject to the transitional
agreement provisions specified in Section IV(F)); all customer lists
(including rewards and loyalty club data at the option of the
Acquirer(s), copies of which may be retained by Defendants at their
option), contracts, accounts, and credit records relating to the Screen
Transfer Divestiture Assets; all repair and performance records and all
other records relating to the Screen Transfer Divestiture Assets; and
2. All intangible assets relating to the operation of the Screen
Transfer Divestiture Assets, including, but not limited to, all
patents, licenses and sublicenses, intellectual property, copyrights,
trademarks, trade names, service marks, service names, (provided,
however, that the names Carmike and AMC, and any registered service
marks of Carmike and AMC may be excluded from the Screen Transfer
Divestiture Assets, subject to the transitional agreement provisions
specified in Section IV(F)), technical information, computer software
and related documentation (provided, however, that Defendants'
proprietary software may be excluded from the Screen Transfer
Divestiture Assets, subject to the transitional agreement provisions
specified in Section IV(F)), know-how and trade secrets, drawings,
blueprints, designs, design protocols, specifications for materials,
specifications for parts and devices, safety procedures for the
handling of materials and substances, all research data concerning
historic and current research and development, quality assurance and
control procedures, design tools and simulation capability, all manuals
and technical information Carmike or AMC provide to their own
employees, customers, suppliers, agents, or licensees (except for the
employee manuals that Carmike or AMC provide to all its employees), and
all research data concerning historic and current research and
development.
H. ``Theatre Divestiture Assets'' means the Initial Theatre
Divestiture Assets and the Screen Transfer Divestiture Assets.
I. ``Landlord Consent'' means any contractual approval or consent
that the landlord or owner of one or more of the Theatre Divestiture
Assets, or of the property on which one or more of the Theatre
Divestiture Assets is situated, must grant prior to the transfer of one
of the Theatre Divestiture Assets to an Acquirer.
J. ``NCM'' means National CineMedia, LLC, a Delaware limited
liability company together with National CineMedia, Inc., headquartered
in Centennial, Colorado, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships and joint
ventures, and their directors, officers, managers, agents, and
employees.
K. ``NCM Holdings'' means any equity interest of NCM that AMC owns
or controls, directly or indirectly, of NCM, whether voting or
nonvoting.
L. ``Competitively Sensitive Information'' means all non-public
information, provided, disclosed, or otherwise made available to the
Defendants by NCM or Screenvision, including but not limited to,
information related to: (i) Current or future business plans; (ii)
technological tests or initiatives; (iii) investments, finances or
budgets; (iv) pricing; (v) information related to other movie theatre
exhibitors; (vi) terms and conditions (including but not limited to
fees or prices) of any actual or prospective contract, agreement,
understanding, or relationship concerning the exhibition of first-run
commercial movies or preshow and cinema advertising services, to
specific or identifiable customers or classes of groups of customers;
or (vii) the existence of any such prospective contract, agreement,
understanding, or relationship, as well as any proprietary customer
information.
M. ``Person'' means any natural person, corporation, association,
firm, partnership, or other business or legal entity.
N. ``Screenvision'' means, SV Holdco, LLC, a Delaware limited
liability company, headquartered in New York, New York, and the
subsidiary it owns and operates, Screenvision Exhibition, Inc., its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
III. APPLICABILITY
A. This Final Judgment applies to AMC and Carmike, as defined
above, and all other persons in active concert or participation with
any of them who receive actual notice of this Final Judgment by
personal service or otherwise.
B. If, prior to complying with Sections IV, VI, VII or XI of this
Final Judgment, Defendants sell or otherwise dispose of all or
substantially all of their assets or of lesser business units that
include the Theatre Divestiture Assets or NCM Divestiture Assets, they
shall require the purchaser to be bound by the provisions of this Final
Judgment. Defendants need not obtain such an agreement from the
Acquirer(s) of the assets divested pursuant to this Final Judgment.
IV. DIVESTITURES OF THEATRES
A. Defendants are ordered and directed, within sixty (60) calendar
days after the filing of the Complaint in this matter, or five (5)
calendar days after notice of entry of this Final Judgment by the
Court, whichever is later, to divest the Initial Theatre Divestiture
Assets in a manner consistent with this Final Judgment to one or more
Acquirer(s) acceptable to the United States in its sole discretion. The
United States, in its sole discretion, may agree to one or more
extensions of this time period, not to exceed sixty (60) calendar days
in total, and shall notify the Court in such circumstances. Defendants
agree to use their best efforts to divest the Initial Theatre
Divestiture Assets as expeditiously as possible.
B. If Defendants fail to accomplish the screen transfer required by
Section XI(A) below for any Screen Transfer Theatre, Defendants are
ordered and directed, within sixty (60) calendar days after the
expiration of the transfer period provided for in Section XI(A), and
any extensions to that period
[[Page 96501]]
granted by the United States, to divest the Screen Transfer Divestiture
Assets in a manner consistent with this Final Judgment to one or more
Acquirer(s) acceptable to the United States in its sole discretion. The
United States, in its sole discretion, may agree to one or more
extensions of this time period, not to exceed ninety (90) calendar days
in total, and shall notify the Court in such circumstances. Defendants
agree to use their best efforts to divest the Screen Transfer
Divestiture Assets as expeditiously as possible. Defendants shall not
divest the Screen Transfer Divestiture Assets to any Acquirer that
contracts with NCM to provide pre-show and cinema advertising services.
Such Screen Transfer Theatres must be divested free and clear of any
contracts with NCM to provide pre-show and cinema advertising services.
C. In accomplishing the divestitures ordered by this Final
Judgment, Defendants promptly shall make known, by usual and customary
means, the availability of the Theatre Divestiture Assets. Defendants
shall inform any person making an inquiry regarding a possible purchase
of the Theatre Divestiture Assets that they are being divested pursuant
to this Final Judgment and provide that person with a copy of this
Final Judgment. Defendants shall offer to furnish to all prospective
Acquirers, subject to customary confidentiality assurances, all
information and documents relating to the Theatre Divestiture Assets
customarily provided in a due diligence process except such information
or documents subject to the attorney-client privilege or work-product
doctrine. Defendants shall make available such information to the
United States at the same time that such information is made available
to any other person.
D. Defendants shall provide the Acquirer(s) and the United States
information relating to the personnel involved in the operation and
management of the applicable Theatre Divestiture Assets to enable the
Acquirer(s) to make offers of employment. Defendants shall not
interfere with any negotiations by the Acquirer(s) to employ or
contract with any employee of any Defendant whose primary
responsibility relates to the operation or management of the applicable
Theatre Divestiture Assets being sold to the Acquirer(s).
E. Defendants shall permit prospective Acquirer(s) of the Theatre
Divestiture Assets to have reasonable access to personnel and to make
inspections of the physical facilities of the Theatre Divestiture
Assets; access to any and all environmental, zoning, and other permit
documents and information; and access to any and all financial,
operational, or other documents and information customarily provided as
part of a due diligence process.
F. In connection with the divestiture of the Theatre Divestiture
Assets, at the option of the Acquirer(s), Defendants shall enter into a
transitional supply, service, support, and use agreement
(``transitional agreement''), of up to 120 days in length, for the
supply of any goods, services, support, including software service and
support, and reasonable use of the names AMC and Carmike, and any
registered service marks of AMC or Carmike, that the Acquirer(s)
request for the operation of the Theatre Divestiture Assets, during the
period covered by the transitional agreement. At the request of the
Acquirer(s), the United States in its sole discretion may agree to one
or more extensions of this time period not to exceed six (6) months in
total. The terms and conditions of the transitional agreement must be
acceptable to the United States in its sole discretion. The
transitional agreement shall be deemed incorporated into this Final
Judgment and a failure by Defendants to comply with any of the terms or
conditions of the transitional agreement shall constitute a failure to
comply with this Final Judgment.
G. Defendants shall warrant to the Acquirer(s) of the Theatre
Divestiture Assets that each asset will be operational on the date of
sale.
H. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Theatre Divestiture
Assets.
I. Defendants shall warrant to the Acquirer(s) that there are no
material defects in the environmental, zoning, or other permits
pertaining to the operation of the Theatre Divestiture Assets.
Following the sale of the Theatre Divestiture Assets, Defendants will
not undertake, directly or indirectly, any challenges to the
environmental, zoning, or other permits relating to the operation of
the Theatre Divestiture Assets.
J. Unless the United States otherwise consents in writing, the
divestitures made pursuant to Section IV(A) and IV(B), or by a
Divestiture Trustee appointed pursuant to Section VI of this Final
Judgment, shall include the entire Theatre Divestiture Assets, and
shall be accomplished in such a way as to satisfy the United States, in
its sole discretion that the Theatre Divestiture Assets can and will be
used by the Acquirer(s) as part of a viable, ongoing business of
operating theatres that exhibit primarily first-run, commercial movies.
Divestiture of the Theatre Divestiture Assets may be made to one or
more Acquirers, provided that in each instance it is demonstrated to
the sole satisfaction of the United States that the Theatre Divestiture
Assets will remain viable and the divestiture of such assets will
remedy the competitive harm alleged in the Complaint. The divestitures,
whether pursuant to Section IV (A), IV (B), or VI of this Final
Judgment,
(1) shall be made to Acquirers that, in the United States' sole
judgment have the intent and capability (including the necessary
managerial, operational, technical, and financial capability) of
competing effectively in the business of theatres exhibiting
primarily first-run, commercial movies; and
(2) shall be accomplished so as to satisfy the United States, in
its sole discretion, that none of the terms of any agreement between
Acquirers and Defendants gives Defendants the ability unreasonably
to raise the Acquirers' costs, to lower the Acquirers' efficiency,
or otherwise to interfere in the ability of any Acquirer to compete
effectively.
K. If Defendants are unable to effect any of the divestitures
required herein due to the inability to obtain the Landlord Consent for
any of the Theatre Divestiture Assets, Defendants shall divest
alternative theatre assets that compete effectively with the theatre or
theatres for which the Landlord Consent was not obtained. The United
States shall, in its sole discretion, determine whether such theatre
assets compete effectively with the theatres for which Landlord Consent
was not obtained.
L. Within five (5) business days following a determination that
Landlord Consent cannot be obtained for any of the Theatre Divestiture
Assets, Defendants shall notify the United States, and Defendants shall
propose an alternative divestiture pursuant to Section IV(K). The
United States shall have then ten (10) business days in which to
determine whether such theatre assets are a suitable alternative
pursuant to Section IV(K). If Defendants' selection is deemed not to be
a suitable alternative, the United States shall in its sole discretion
select alternative theatre assets to be divested from among those
theatre(s) that the United States has determined, in its sole
discretion, compete effectively with the theatre(s) for which Landlord
Consent was not obtained.
M. If a Divestiture Trustee is responsible for effecting
divestiture of the Theatre Divestiture Assets, it shall notify the
United States and Defendants within five (5) business days following a
determination that Landlord Consent
[[Page 96502]]
cannot be obtained for one or more of the Theatre Divestiture Assets.
Defendants shall thereafter have five (5) business days to propose an
alternative divestiture pursuant to Section IV(K). The United States
shall then have ten (10) business days to determine whether the
proposed theatre assets are a suitable competitive alternative pursuant
to Section IV(K). If Defendants' selection is deemed not to be a
suitable competitive alternative, the United States shall in its sole
discretion select alternative theatre assets to be divested from among
those theatre(s) that the United States has determined, in its sole
discretion, compete effectively with the theatre(s) for which Landlord
Consent was not obtained.
V. NOTICE OF PROPOSED THEATRE DIVESTITURES
A. Within two (2) business days following execution of a definitive
divestiture agreement, Defendants or the Divestiture Trustee, whoever
is then responsible for effecting the divestitures required herein,
shall notify the United States of any proposed divestitures required by
Sections IV(A), IV(B), and VI of this Final Judgment. If the
Divestiture Trustee is responsible, it shall similarly notify
Defendants. The notice shall set forth the details of the proposed
divestitures and list the name, address, and telephone number of each
person not previously identified who offered or expressed an interest
in or desire to acquire any ownership interest in the Theatre
Divestiture Assets, together with full details of the same.
B. Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States, in its sole discretion, may
request from Defendants, the proposed Acquirer(s), any other third
party, or the Divestiture Trustee, if applicable, additional
information concerning the proposed divestitures, the proposed
Acquirer(s), and any other potential Acquirer(s). Defendants and the
Divestiture Trustee shall furnish any additional information requested
to the United States within fifteen (15) calendar days of receipt of
the request, unless the parties otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from Defendants, the
proposed Acquirer(s), any third party, and the Divestiture Trustee,
whichever is later, the United States shall provide written notice to
Defendants, and the Divestiture Trustee, if there is one, stating
whether it objects to the proposed divestitures. If the United States
provides written notice that it does not object, the divestitures may
be consummated, subject only to the Defendants' limited right to object
to the sale under Section VI(C) of this Final Judgment. Absent written
notice that the United States does not object to the proposed
Acquirer(s) or upon objection by the United States, a divestiture
proposed under Section IV(A), IV(B), or VI shall not be consummated.
Upon objection by Defendants under Section VI(C), a divestiture
proposed under Section VI shall not be consummated unless approved by
the Court.
VI. APPOINTMENT OF TRUSTEE FOR THEATRE DIVESTITURES
A. If Defendants have not divested the Theatre Divestiture Assets
within the time period specified in Section IV(A) and IV(B),
respectively, Defendants shall notify the United States of that fact in
writing, specifically identifying the Theatre Divestiture Assets that
have not been divested. Upon application of the United States, the
Court shall appoint a Divestiture Trustee selected by the United States
and approved by the Court to effect the divestiture of the applicable
Theatre Divestiture Assets.
B. After the appointment of a Divestiture Trustee becomes
effective, only the Divestiture Trustee shall have the right to sell
the applicable Theatre Divestiture Assets. The Divestiture Trustee
shall have the power and authority to accomplish the divestitures to
Acquirer(s) acceptable to the United States at such price and on such
terms as are then obtainable upon reasonable effort by the Divestiture
Trustee, subject to the provisions of Sections IV, V, VI VIII, IX, and
XIV, of this Final Judgment, and shall have such other powers as this
Court deems appropriate. Subject to Section VI (D) of this Final
Judgment, the Divestiture Trustee may hire at the cost and expense of
Defendants any investment bankers, attorneys, or other agents, who
shall be solely accountable to the Divestiture Trustee and reasonably
necessary in the Divestiture Trustee's judgment to assist in the
divestiture(s). Any such investment bankers, attorneys, or other agents
shall serve on such terms and conditions as the United States approves,
including confidentiality requirements and conflict of interest
certifications.
C. Defendants shall not object to a sale by the Divestiture Trustee
on any ground other than the Divestiture Trustee's malfeasance. Any
such objections by Defendants must be conveyed in writing to the United
States and the Divestiture Trustee within ten (10) calendar days after
the Divestiture Trustee has provided the notice required under Section
V.
D. The Divestiture Trustee shall serve at the cost and expense of
Defendants pursuant to a written agreement, on such terms and
conditions as the United States approves, including confidentiality
requirements and conflict of interest certifications. The Divestiture
Trustee shall account for all monies derived from the sale of the
applicable Theatre Divestiture Assets, and all costs and expenses so
incurred. After approval by the Court of the Divestiture Trustee's
accounting, including fees for its services yet unpaid and those of any
professionals and agents retained by the Divestiture Trustee, all
remaining money shall be paid to Defendants and the trust shall then be
terminated. The compensation of the Divestiture Trustee and any
professionals and agents retained by the Divestiture Trustee shall be
reasonable in light of the value of the Theatre Divestiture Assets
subject to sale by the Divestiture Trustee and based on a fee
arrangement providing the Divestiture Trustee with an incentive based
on the price and terms of the divestitures and the speed with which
they are accomplished, but timeliness is paramount. If the Divestiture
Trustee and Defendants are unable to reach agreement on the Divestiture
Trustee's or any agents' or consultants' compensation or other terms
and conditions of engagement within 14 calendar days of appointment of
the Divestiture Trustee, the United States may, in its sole discretion,
take appropriate action, including making a recommendation to the
Court. The Divestiture Trustee shall, within three (3) business days of
hiring any other professionals or agents, provide written notice of
such hiring and the rate of compensation to Defendants and the United
States.
E. Defendants shall use their best efforts to assist the
Divestiture Trustee in accomplishing the required divestitures. The
Divestiture Trustee and any consultants, accountants, attorneys, and
other persons retained by the Divestiture Trustee shall have full and
complete access to the personnel, books, records, and facilities of the
assets and business to be divested, and Defendants shall develop
financial and other information relevant to such assets and business as
the Divestiture Trustee may reasonably request, subject to reasonable
protection for trade secret or other confidential research,
development, or commercial information or any applicable privileges.
Defendants shall take no
[[Page 96503]]
action to interfere with or to impede the Divestiture Trustee's
accomplishment of the divestitures.
F. After its appointment, the Divestiture Trustee shall file
monthly reports with the parties and the Court setting forth the
Divestiture Trustee's efforts to accomplish the divestitures ordered
under this Final Judgment. To the extent such reports contain
information that the Divestiture Trustee deems confidential, such
reports shall not be filed in the public docket of the Court. Such
reports shall include the name, address, and telephone number of each
person who, during the preceding month, made an offer to acquire,
expressed an interest in acquiring, entered into negotiations to
acquire, or was contacted or made an inquiry about acquiring, any
interest in the Theatre Divestiture Assets, and shall describe in
detail each contact with any such person. The Divestiture Trustee shall
maintain full records of all efforts made to divest the Theatre
Divestiture Assets.
G. If the Divestiture Trustee has not accomplished the divestitures
ordered under this Final Judgment within six (6) months after its
appointment, the Divestiture Trustee shall promptly file with the Court
a report setting forth (1) the Divestiture Trustee's efforts to
accomplish the required divestitures, (2) the reasons, in the
Divestiture Trustee's judgment, why the required divestitures have not
been accomplished, and (3) the Divestiture Trustee's recommendations.
To the extent such reports contain information that the Divestiture
Trustee deems confidential, such reports shall not be filed in the
public docket of the Court. The Divestiture Trustee shall at the same
time furnish such report to the United States, which shall have the
right to make additional recommendations consistent with the purpose of
the trust. The Court thereafter shall enter such orders as it shall
deem appropriate to carry out the purpose of the Final Judgment, which
may, if necessary, include extending the trust and the term of the
Divestiture Trustee's appointment by a period requested by the United
States.
H. If the United States determines that the Divestiture Trustee has
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend the Court appoint a substitute
Divestiture Trustee.
VII. DIVESTITURE OF NCM HOLDINGS
A. Defendants are hereby ordered and directed, in accordance with
the terms of this Final Judgment, on or before June 20, 2019, to divest
that portion of the NCM Holdings sufficient to cause Defendants to own
no more than 4.99 percent of the outstanding shares of NCM on a fully
converted basis (the ``NCM Divestiture Assets''). Defendants must
divest the NCM Divestiture Assets on the following schedule: (i) On or
before twelve (12) months from the date of the filing of the Complaint
in this matter that portion of the NCM Holdings sufficient to cause
Defendants to own no more than 15 percent of all outstanding shares of
NCM on a fully converted basis, (ii) on or before twenty-four (24)
months from the date of the filing of the Complaint in this matter that
portion of the NCM Holdings sufficient to cause Defendants to own no
more than 7.5 percent of all outstanding shares of NCM on a fully
converted basis; and (iii) on or before June 20, 2019 that portion of
the NCM Holdings sufficient to cause Defendants to own no more than
4.99 percent of all outstanding shares of NCM on a fully converted
basis. The United States, in its sole discretion, may agree to one or
more extensions of this time period, not to exceed sixty (60) calendar
days in total, and shall notify the Court in such circumstances.
B. Defendants are enjoined and restrained from the date of the
filing of the Complaint in this matter from acquiring, directly or
indirectly, any additional NCM Holdings except to the extent an NCM
annual audience attendance adjustment or an acquisition of a movie
theatre or movie theatre chain results in Defendants' NCM Holdings
exceeding the thresholds set forth in Section VII (A). To the extent an
NCM annual audience attendance adjustment or an acquisition of a movie
theatre or movie theatre chain results in Defendants' NCM Holdings'
exceeding the thresholds set forth in Section VII (A), then Defendants
shall have 90 days from the date their NCM Holdings exceed the
applicable threshold in Section VII (A) to sell down their NCM Holdings
so that their NCM Holdings comply with the applicable threshold. The
United States, in its sole discretion, may agree to one or more
extensions of this time period, not to exceed 60 calendar days in
total, and shall notify the Court in such circumstances.
C. The divestitures required by Section VII(A) may be made by open
market sale, public offering, private sale, repurchase by NCM, or a
combination thereof. Such divestitures shall not be made by private
sale or placement to any person who provides pre-show and cinema
advertising services other than NCM unless the United States, in its
sole discretion, shall otherwise agree in writing.
VIII. FINANCING
Defendants shall not finance all or any part of any purchase made
pursuant to Sections IV or VII of this Final Judgment.
IX. HOLD SEPARATE
Until the divestitures of the Theatre Divestiture Assets required
by this Final Judgment have been accomplished, Defendants shall take
all steps necessary to comply with the Hold Separate Stipulation and
Order entered by this Court. Defendants shall take no action that would
jeopardize the divestitures ordered by this Court.
X. NCM PROHIBITED CONDUCT
A. From the date of the filing of the Complaint in this matter,
Defendants are enjoined and restrained, directly or indirectly, from
holding any governance rights in NCM, including any seats on NCM's
Board of Directors and from exercising any voting rights in NCM.
B. From the date of the filing the Complaint in this matter,
Defendants are enjoined and restrained, directly or indirectly, from:
1. Suggesting, individually or as part of a group, any candidate
for election to NCM's Board of Directors, or having any officer,
director, manager, employee, or agent serve as an officer, director,
manager, employee, or in a comparable position with or for NCM;
2. Using or attempting to use any ownership interest in NCM to
exert any influence over NCM in the conduct of NCM's business,
including but not limited to, NCM's strategies regarding the pricing
of NCM's services;
3. Using or attempting to use any rights or duties under any
advertising agreement or relationship between Defendants and NCM
(including any rights or duties Defendants may have as a customer of
NCM), to influence NCM in the conduct of NCM's business with respect
to any Person other than AMC;
4. Participating in, being present at, or receiving any notes,
minutes, or agendas of, information from, or any documents
distributed in connection with, any nonpublic meeting of NCM's Board
of Directors or any committee thereof, or any other governing body
of NCM. For purposes of this provision, the term ``meeting''
includes any action taken by consent of the relevant directors in
lieu of a meeting;
5. Voting or permitting to be voted any NCM shares that
Defendants own unless the United States, in its sole discretion,
otherwise consents in writing;
6. Communicating to or receiving from any officer, director,
manager, employee, or agent of NCM any nonpublic information
regarding any aspect of Defendants' or NCM's business, including any
plans or proposals with respect thereto; and
7. Proposing to any officer, director, manager, employee, or
agent of NCM that NCM merge with, acquire, or sell itself to another
Person.
[[Page 96504]]
C. Nothing in this Section, however, is intended to prevent: (i)
Defendants from procuring preshow and cinema advertising services from
NCM, including receiving necessary non-public information from NCM in
the context of the Defendants' customer relationship regarding the
same, or to prevent NCM from providing pre-show and cinema advertising
services to Defendants, including providing necessary non-public
information to Defendants in the context of NCM's vendor relationship
regarding the same; (ii) joint promotions between NCM and Defendants
and communications regarding the provision or procurement of pre-show
and cinema advertising services from NCM or Defendants, respectively;
(iii) Defendants from hiring NCM personnel or NCM from hiring
Defendants personnel (provided that such personnel are not
simultaneously employed or otherwise affiliated with NCM or Defendants,
respectively); and (iv) nonpublic communications regarding industry-
wide issues or possible potential business transactions between the two
companies provided that such communications do not violate the
antitrust laws or any other applicable law or regulation.
XI. TRANSFER OF NCM-ALIGNED THEATRE SCREENS
A. Defendants are hereby ordered and directed, within sixty (60)
calendar days of the filing of the Complaint in this matter, to (i)
implement, use, and continuously display Screenvision pre-show services
and cinema advertising at the Screen Transfer Theatres for the term of
this Final Judgment; and (ii) discontinue and permanently remove NCM
pre-show services and cinema advertising at the Screen Transfer
Theatres for the term of this Final Judgment. The United States, in its
sole discretion, may agree to one or more extensions of this time
period, not to exceed sixty (60) days in total, and shall notify the
Court in such circumstances.
B. If Defendants do not effectuate the implementation of
Screenvision pre-show services and cinema advertising at any Screen
Transfer Theatre and the termination, if applicable, of any NCM pre-
show services and cinema advertising at that Screen Transfer Theatre
during the time period set forth in Section XI(A) (including any
extensions to that time period granted pursuant to that Section), then
Defendants are ordered and directed to divest that Screen Transfer
Theatre pursuant to the terms of Section IV(B) of this Final Judgment.
For the avoidance of doubt, the Screen Transfer Theatres that
Defendants must divest pursuant to this paragraph are referred to
herein as the ``Screen Transfer Divestiture Assets.''
XII. FIREWALLS
A. Defendants shall implement and maintain reasonable procedures to
prevent (i) the sharing of Competitively Sensitive Information between
Defendants and NCM except as necessary to administer an exhibitor
services agreement or exhibition agreement between NCM and Defendants
to supply preshow and cinema advertising services; (ii) the sharing of
Competitively Sensitive Information between Defendants and Screenvision
except as necessary to administer an exhibitor services agreement or
exhibition agreement between Screenvision and Defendants to supply
preshow and cinema advertising services; (iii) the sharing of
Competitively Sensitive Information or otherwise serving as a conduit
to share Competitively Sensitive Information between NCM and
Screenvision; and (iv) Defendants from obtaining through their
ownership or governance position at Screenvision or NCM any
Competitively Sensitive Information of or about the business of any
movie theatre exhibitor other than Defendants.
B. Defendants shall, within thirty (30) calendar days of the
Court's entry of the Hold Separate Stipulation and Order, submit to the
United States a document setting forth in detail the procedures
implemented to effect compliance with this Section. The United States
shall notify Defendants within ten (10) business days whether it
approves of or rejects Defendants' compliance plan, in its sole
discretion.
C. In the event Defendants' compliance plan is rejected, the
reasons for the rejection shall be provided to Defendants and
Defendants shall be given the opportunity to submit, within ten (10)
business days of receiving the notice of rejection, a revised
compliance plan. If the parties cannot agree on a compliance plan, the
United States shall have the right to request that the Court rule on
whether Defendants' proposed compliance plan is reasonable.
D. Defendants may at any time submit to the United States evidence
relating to the actual operation of any firewall in support of a
request to modify any firewall set forth in this Section. In
determining whether it would be appropriate for the United States to
consent to modify the firewall, the United States, in its sole
discretion, shall consider the need to protect NCM, Screenvision, or
movie theatre exhibitor Competitively Sensitive Information and the
impact the firewall has had on Defendants' ability to efficiently
support the theatrical exhibition of movies.
XIII. COMPLIANCE PROGRAM
A. Defendants shall maintain a compliance program that shall
include designating, within thirty (30) days of the entry of this Final
Judgment, a Compliance Officer with responsibility for achieving
compliance with this Final Judgment. The Compliance Officer shall, on a
continuing basis, supervise the review of current and proposed
activities to ensure compliance with this Final Judgment. The
Compliance Officer shall be responsible for accomplishing the following
activities:
(1) Distributing, within thirty (30) days of the entry of this
Final Judgment, a copy of this Final Judgment to all of Defendants'
officers, directors, or any company employee or manager with
management responsibility or oversight of theatrical exhibition and
preshowcinema advertising services;
(2) Distributing, within thirty (30) days of succession, a copy
of this Final Judgment to any Person who succeeds to a position
described in Section XIII(A)(1); and
(3) Obtaining within sixty (60) days from the entry of this
Final Judgment, and once within each calendar year after the year in
which this Final Judgment is entered, and retaining for the term of
this Final Judgment, a written certification from each Person
designated in Sections XIII(A)(1) and XIII(A)(2) that he or she: (a)
Has received, read, understands, and agrees to abide by the terms of
this Final Judgment; (b) understands that failure to comply with
this Final Judgment may result in conviction for criminal contempt
of court; and (c) is not aware of any violation of the Final
Judgment. Copies of such written certifications are to be promptly
provided to the U.S. Department of Justice, Antitrust Division.
B. Within sixty (60) days of the entry of this Final Judgment,
Defendants shall certify to the United States that they have (1)
designated a Compliance Officer, specifying his or her name, business
address and telephone number; and (2) distributed the Final Judgment in
accordance with Section XIII(A)(1).
C. If any of Defendants' directors or officers or the Compliance
Officer learns of any violation of this Final Judgment, Defendants
shall within ten (10) business days provide to the U.S. Department of
Justice, Antitrust Division a written detailed description of the
nature of the violation with the names, titles, and company affiliation
of each person involved.
XIV. AFFIDAVITS
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestitures and screen transfers have been completed
[[Page 96505]]
under Sections IV(A), IV(B), VI, VII, and XI. Defendants shall deliver
to the United States an affidavit as to the fact and manner of its
compliance with Sections IV (A), IV (B), VI, VII, and XI of this Final
Judgment. Each such affidavit pertaining to Sections IV (A), IV (B),
and VI shall include the name, address, and telephone number of each
person who, during the preceding thirty (30) calendar days, made an
offer to acquire, expressed an interest in acquiring, entered into
negotiations to acquire, or was contacted or made an inquiry about
acquiring, any interest in the Theatre Divestiture Assets, and shall
describe in detail each contact with any such person during that
period. Each such affidavit pertaining to Sections IV(A), IV(B), and VI
shall also include a description of the efforts Defendants have taken
to solicit buyers for and complete the sale of the Theatre Divestiture
Assets, and to provide required information to prospective Acquirers,
including the limitations, if any, on such information. Each such
affidavit shall also describe the fact and manner of Defendants'
compliance with Section XI (A) and the arrangements Defendants have
made to complete the required screen transfers in a timely fashion.
Assuming the information set forth in the affidavit is true and
complete, any objection by the United States to information provided by
Defendants, including limitations on information, shall be made within
fourteen (14) calendar days of receipt of each such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, Defendants shall deliver to the United States an
affidavit that describes in reasonable detail all actions taken and all
steps implemented on an ongoing basis to comply with Section IX of this
Final Judgment. Defendants shall deliver to the United States an
affidavit describing any changes to the efforts and actions outlined in
their earlier affidavits filed pursuant to this section within fifteen
(15) calendar days after the change is implemented.
C. Defendants shall notify the United States no less than sixty
(60) calendar days prior to the expiration of each of the deadlines for
divesting the NCM Divestiture Assets identified in Section VII (A) of
the arrangements Defendants have made to complete such divestitures in
a timely fashion. Defendants shall no later than five (5) calendar days
after each of the deadlines identified in Section VII(A) deliver to the
United States an affidavit as to the fact and manner of its compliance
with Section VII(A).
D. For the term of this Final Judgment, on or before each annual
anniversary of the date of the filing of the Complaint in this matter,
Defendants shall file with the United States a statement as to the fact
and manner of its compliance with the provisions of Sections VII (B),
X, and XII, including a statement of the percentage of all outstanding
shares of NCM owned by Defendants and a description of any violations
of Sections VII (B), X, and XII.
E. Defendants shall keep all records of all efforts made to
preserve and divest the Theatre Divestiture Assets and the NCM
Divestiture Assets until one year after such divestitures have been
completed.
XV. COMPLIANCE INSPECTION
A. For the purposes of determining or securing compliance with this
Final Judgment or of any related orders such as the Hold Separate
Stipulation and Order, or of determining whether the Final Judgment
should be modified or vacated, and subject to any legally recognized
privilege, from time to time authorized representatives of the United
States Department of Justice, including consultants and other persons
retained by the United States, shall, upon written request of an
authorized representative of the Assistant Attorney General in charge
of the Antitrust Division, and on reasonable notice to Defendants, be
permitted:
(1) access during Defendants' office hours to inspect and copy,
or at the option of the United States, to require Defendants to
provide hard copy or electronic copies of, all books, ledgers,
accounts, records, data, and documents in the possession, custody,
or control of Defendants, relating to any matters contained in this
Final Judgment; and
(2) to interview, either informally or on the record,
Defendants' officers, employees, or agents, who may have their
individual counsel present, regarding such matters. The interviews
shall be subject to the reasonable convenience of the interviewee
and without restraint or interference by Defendants.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
Defendants shall submit written reports or responses to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
D. If at the time information or documents are furnished by
Defendants to the United States, Defendants represent and identify in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(1)(G) of the
Federal Rules of Civil Procedure, and Defendants mark each pertinent
page of such material, ``Subject to claim of protection under Rule
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United
States shall give Defendants ten (10) calendar days notice prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding).
XVI. NO REACQUISITION
Defendants may not reacquire any part of the Theatre Divestiture
Assets or the NCM Divestiture Assets during the term of this Final
Judgment.
XVII. RETENTION OF JURISDICTION
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XVIII. EXPIRATION OF FINAL JUDGMENT
Unless this Court grants an extension, this Final Judgment shall
expire ten (10) years from the date of its entry.
XIX. PUBLIC INTEREST DETERMINATION
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including making copies available to the
public of this Final Judgment, the Competitive Impact Statement, and
any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Date: ___, 201_
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
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United States District Judge
[[Page 96506]]
Appendix A
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Theatre(s) Address
------------------------------------------------------------------------
1.................... AMC Festival Plaza 16 OR 7925 Vaughn Rd.,
Carmike Chantilly 13 Montgomery, AL 36116.
Big D. 10477 Chantilly Pkwy,
Montgomery, AL 36117.
2.................... AMC Destin Commons 14 OR Destin Commons, 4000
Carmike Boulevard 10 Legendary Dr., Destin,
Big D. FL 32541.
465 Grand Blvd.,
Miramar Beach, FL
32550.
3.................... AMC Orange Park 24 OR Orange Park Mall, 1910
Carmike Fleming Island Wells Rd., Orange
12. Park, FL 32073.
1820 Town Center Blvd.,
Fleming Island, FL
32003.
4.................... AMC Avenue Forsyth 12 OR The Collection at
Carmike Movies 400 12. Forsyth, 350 Peachtree
Pkwy, Cumming, GA
30041.
415 Atlanta Rd.,
Cumming, GA 30040.
5.................... AMC Stonecrest Mall 16 Ashley Stewart, 8060
OR Carmike Conyers Mall Pkwy, Lithonia,
Crossroads 16. GA 30038.
1536 Dogwood Dr. SE.,
Conyers, GA 30013.
6.................... AMC Crestwood 18 OR 13221 Rivercrest Dr.,
Carmike Digiplex Crestwood, IL 60445.
Lansing 8. 16621 Torrence Ave.,
Lansing, IL 60438.
7.................... AMC Normal 14 OR Carmike 201 McKnight St.,
Ovation Cinema 10. Normal, IL 61761.
415 Detroit Dr.,
Bloomington, IL 61704.
8.................... (AMC Pekin 14) OR 1124 Edgewater Dr.,
(Carmike Sunnyland 10 Pekin, IL 61554.
and Carmike Grand Washington Plaza, 40
Prairie 18). Sunnyland Plaza,
Washington, IL 61571.
5311 West American
Prairie Dr., Peoria,
IL 61615.
9.................... AMC Inver Grove OR 5567 Bishop Ave., Inver
Carmike Oakdale 20. Grove Heights, MN
55076.
1188 Helmo Ave. N,
Oakdale, MN 55128.
10................... (AMC Coon Rapids and AMC 10051 Woodcrest Dr.
Arbor Lakes 16) OR NW., Coon Rapids, MN
(Carmike Wynnsong 15). 55433.
12575 Elm Creek Blvd.
N, Maple Grove, MN
55311.
2430 County Hwy 10,
Mounds View, MN 55112.
11................... AMC Rockaway 16 OR 363 Mt Hope Ave.,
Carmike Digiplex Sparta Rockaway, NJ 07866.
3. 25 Centre St., Sparta
Township, NJ 07871.
12................... (AMC Mountainside 10) OR 1021 Route 22,
(Carmike Digiplex Mountainside, NJ
Rialto Westfield 6 and 07092.
Carmike Digiplex 250 East Broad St.,
Cranford 5). Westfield, NJ 07090.
25 North Ave. W.,
Cranford NJ 07016.
13................... AMC Lawton 12 OR Carmike 200 SW., C Ave.,
Patriot 13. Lawton, OK 73501.
2803 NW., 67th St.,
Lawton, OK 73505.
14................... (AMC Tilghman Square 8) Tilghman Square, 4608
OR (Carmike Promenade Broadway, Allentown,
16 + IMAX and Carmike PA 18104.
16). 2805 Center Valley
Pkwy, Center Valley,
PA 18034.
1700 Catasauqua Rd.,
Allentown, PA 18109.
15................... AMC Fitchburg 18 OR 6091 McKee Rd.,
Sundance Carmike Fitchburg, WI 53719.
Madison. 430 North Midvale
Blvd., Madison, WI
53705.
------------------------------------------------------------------------
Appendix B
------------------------------------------------------------------------
Theatres Address
------------------------------------------------------------------------
1.................... AMC Barrett Commons 24.. 2600 Cobb Pl. Ln. NW.,
Kennesaw, GA 30144.
2.................... AMC Colonial 18......... Lawrenceville Market
Shopping Center, 825
Lawrenceville-Suwanee
Rd., Lawrenceville, GA
30043.
3.................... AMC Crossroads Mall 16.. 1211 E Interstate 240
Service Rd., Oklahoma
City, OK 73149.
4.................... AMC Dublin Village 18... Dublin Village Center,
6700 Village Pkwy,
Dublin, OH 43017.
5.................... AMC Dutch Square 14..... Dutch Square Mall, 421
Bush River Rd. #80,
Columbia, SC 29210.
6.................... AMC Showplace Naperville 2815 Show Place Dr.,
16. Naperville, IL 60564.
7.................... AMC Newport On the Levee Newport on the Levee,
20. Levy, 1 Levee Way
#4100, Newport, KY
41071.
8.................... AMC Starplex Rio Grande 4586 E. US Hwy 83, Rio
10. Grande City, TX 78582.
9.................... AMC Southpoint 17....... The Streets at
Southpoint, 8030
Renaissance Pkwy,
Durham, NC 27713.
10................... AMC Loews Waterfront 22. 300 W. Waterfront Dr.,
West Homestead, PA
15120.
11................... Sundance Kabuki......... 1881 Post St., San
Francisco, CA 94115.
12................... Sundance Cinemas Houston Bayou Place, 510 Texas
Ave., Houston, TX
77002.
13................... Sundance Cinemas Seattle 4500 9th Ave. NE.,
Seattle, WA 98105.
14................... Sundance Sunset Cinema.. 8000 Sunset, 8000
Sunset Blvd., Los
Angeles, CA 90046.
15................... Sundance Carmike Madison 430 North Midvale
*. Blvd., Madison, WI
53705.
16................... AMC Dine-in Theatres Georgia Atlanta Tower
Buckhead 6. Place, Tower Place,
3340 Peachtree Rd NE.,
Atlanta, GA 30326.
17................... AMC Easton Town Center Easton Town Center, 275
30 with Dine-in Easton Station,
Theatres & IMAX. Columbus, OH 43219.
18................... AMC Dine-in Theatres 2515 E Camelback Rd.,
Esplanade 14. Phoenix, AZ 85016.
19................... AMC Grapevine Mills 30 Grapevine Mills, 3150
with Dine-in Theatres. Grapevine Mills Pkwy,
Grapevine, TX 76051.
20................... AMC Mesquite 30 with 19919 Lyndon B Johnson
Dine-in Theatres. Fwy, Mesquite, TX
75149.
21................... AMC Dine-in Theatres 23955 E Plaza Ave.,
Southlands 16 Featuring Aurora, CO 80016.
Red Kitchen.
22................... AMC Dine-in Theatres 12657 Olive Blvd.,
West Olive 16. Creve Couer, MO 63141.
23................... AMC Lawton 12 *......... 200 SW C Ave., Lawton,
OK 73501.
[[Page 96507]]
24................... AMC Dine-in Theatres Yorktown Center, 80
Yorktown 18. Yorktown Shopping
Center, Lombard, IL
60148.
------------------------------------------------------------------------
* Transferred to the Screenvision network only to the extent AMC retains
these theatres.
[FR Doc. 2016-31652 Filed 12-29-16; 8:45 am]
BILLING CODE 4410-11-P